Top

Index Option News

  /  News   /  Chips Are Down but Not Out; Here Are 2 ‘Strong Buy’ Semiconductor Stocks From a Top Analyst

Chips Are Down but Not Out; Here Are 2 ‘Strong Buy’ Semiconductor Stocks From a Top Analyst

S&P 500

3,779.53

-11.40(-0.30%)

 

Dow 30

30,264.45

-51.87(-0.17%)

 

Nasdaq

11,112.26

-64.15(-0.57%)

 

Russell 2000

1,757.60

-18.17(-1.02%)

 

Crude Oil

87.72

+1.20(+1.39%)

 

Gold

1,720.70

-9.80(-0.57%)

 

Silver

20.54

-0.56(-2.65%)

 

EUR/USD

0.9881

-0.0105(-1.05%)

 

10-Yr Bond

3.7710

+0.1540(+4.26%)

 

GBP/USD

1.1315

-0.0159(-1.39%)

 

USD/JPY

144.6250

+0.4260(+0.30%)

 

BTC-USD

20,196.87

+242.51(+1.22%)

 

CMC Crypto 200

457.72

-0.68(-0.15%)

 

FTSE 100

7,052.62

-33.84(-0.48%)

 

Nikkei 225

27,120.53

+128.32(+0.48%)

 

Chip stocks have had a brutal ride in 2022. The tables have turned on a sector particularly sensitive to cycles; after seeing outsized growth during the pandemic, and despite the global chip shortage, waning demand has seen many in the segment hit hard. Factor in some lofty valuations, a slowing economy and fears of a full-blown recession and the result is the SOX (the main Semiconductor index) is down by 38% year-to-date.

That said, there are many good companies operating in the space whose shares are now at very depressed levels. In fact, Rosenblatt Securities’ Hans Mosesmann, one of Wall Street’s top analysts and experts on all chip matters, thinks some names in the sector are due to push much higher over the coming months.

So, let’s take a look at two of this 5-star analyst’s picks and see why he finds them so appealing right now. With help from the TipRanks database, we can see that Mosesmann is certainly not alone in his bullish stance; both are rated as Strong Buys by the analyst consensus too.

Marvell Technology, Inc. (MRVL)

We’ll start with one of the semiconductor sector’s heavyweights, Marvell, a maker of integrated circuits. This large-cap caters to numerous end markets such as data centers, enterprise, automotive, cloud, consumer and carrier infrastructure. While several years ago most of the firm’s business came from the consumer electronics segment, following several acquisitions, the majority is now generated from data infrastructure (data center, industrial, automotive, mobile network). Seeing out 2021, the company had a 6,000+ workforce, more than 10,000 global patents, and annual revenue of $4.5 billion.

Despite being affected by ongoing supply constraints, the revenue haul has continued its growth trajectory in 2022, as was evident in the company’s latest quarterly report – for the second quarter of fiscal year 2023 (July quarter). Revenue increased by 41% year-over-year to a record $1.52 billion, while adj. EPS of $0.57 was up from the $0.34 delivered in the same period last year.

However, supply chain snags were cited as the main reason behind a disappointing outlook. For the October quarter, Marvell guided for revenue of $1.56 billion, below the $1.585 billion expected on Wall Street. Likewise, the adj. EPS of $0.59 at the midpoint, fell short of consensus at $0.61.

The market did what the market does in such situations and sent shares down subsequently. All in all, in 2022’s bear market, MRVL shares have shaved off 45% of their value.

That is not a concern for Mosesmann, who remains “bullish” on the company’s prospects.

“CEO Matt Murphy articulated a strong acceleration into the January quarter and remains incrementally more bullish on calendar 2023 as supply constraints ease somewhat (they will not go away completely), and multiple new products and custom ASIC ramp inflect (incremental $400 million plus, and $800 million plus in 2024),” Mosesmann explained. “Matt Murphy’s team has put together a world class execution machine that is strategically positioned to increase dollar content and customer engagement over the long term.”

Mosesmann is bullish, indeed; along with a Buy rating, the analyst’s $125 price target makes room for 12-month gains of 162%. (To watch Mosesmann’s track record, click here)

Most are echoing Mosesmann’s sentiment; barring 3 fencesitters, all 17 other recent analyst reviews are positive, making the consensus view here a Strong Buy. The average target stands at $71.20 and could generate returns of ~49% in the year ahead. (See Marvell stock forecast on TipRanks)

Lattice Semiconductor (LSCC)

Next up, we have Lattice Semiconductor, a maker of low power, field-programmable gate arrays (FPGAs). Given they are reconfigurable and can be programmed to execute any digital logic, FPGAs are well-suited for adaptive systems. After focusing on several other products too, over the past few years, Lattice has made a conscious decision to focus its energies on the low-power FPGA market, with a mission statement of becoming the low power programmable leader.

Looking at the constant upwards movement of the revenue haul, it’s a plan that appears to be working. Sales have been steadily growing over the past few years. The latest set of results – for F2Q22 – showed $161.37 million at the top-line, a 28.2% year-over-year increase. At the bottom-line, the company delivered adj. EPS of $0.42, also up from the $0.25 delivered in the same quarter last year. Both results were also above analysts’ expectations.

Even better, bucking the trend for warnings of a slowdown, revenue for Q3 is expected to be in the range between $161 million and $171 million; the consensus estimate stood at just $161.43 million.

The shares, though, have not been immune to the overall market conditions, and have retreated ~29% since the turn of the year.

Nevertheless, it’s the sort of performance which has Mosesmann singing the company’s praises.

“Lattice delivered another strong beat and raise for 2Q22 despite weakness in Consumer (8% of sales), driven by momentum in Communications/Computing and Industrial/ Automotive. A much richer mix of Nexus products, higher S/W attach rates, and share gains in small FPGAs are driving topline and gross margins,” the analyst said. “FCF now at an impressive 28% is a testament to the success of the A-team Jim Anderson recruited in 2017/18. We see Lattice as uniquely positioned as the only FPGA player innovating in small, and upcoming mid-tier, FPGA’s in a new era of AI disruption that requires a combination of programmability, low power, high parallel data-centric workloads, and faster time to market requirements.”

Unsurprisingly, then, Mosesmann rates Lattice shares a Buy, backed by a $95 price target. The implication for investors? Upside of 73% from current levels.

And what about the rest of the Street? Most are on board too; the ratings break down as 6 to 1 in favor of Buys over Holds, all culminating in a Strong Buy consensus rating. The forecast calls for one-year gains of ~37%, considering the average target stands at $75.17. (See Lattice Semiconductor stock forecast on TipRanks)

To find good ideas for chip stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Advertisement

Benzinga

What Analysts Think About These High-Dividend Mortgage REITs

You would be hard-pressed to find a worse-performing real estate investment trust (REIT) class in 2022 than mortgage REITs (mREITs). With over 8% inflation and the Federal Reserve raising interest rates multiple times, the mREIT group has been trounced. Many mREITs are still maintaining dividends without cuts, and with the substantial price declines this year, many of these stocks are now paying high single-digit and even double-digit dividend yields. But what do analysts think about the future

Reuters

Wall Street cranks up Exxon’s outlook on booming natgas prices

Wall Street analysts on Wednesday sharply increased their view of Exxon Mobil Corp’s third quarter earnings after the company disclosed a $2 billion profit gain from selling natural gas. The earnings revisions follow a securities filing that offered a snapshot of operating profits. Exxon could earn about $4 per share, compared to the second quarter’s $4.21 per share profit, analysts wrote.

Reuters

U.S. oil groups urge Biden to take fuel export ban off table -letter

(Reuters) -The largest U.S. oil trade groups said on Tuesday that they have “significant concerns” that the Biden administration is considering limiting fuel exports to lower consumer prices and urged top officials to take the option off the table, according to a letter seen by Reuters. The joint letter from the American Petroleum Institute and the American Fuel and Petrochemical Manufactures to Energy Secretary Jennifer Granholm represents the latest volley in a clash between the oil industry and the Biden administration over high energy prices. President Joe Biden has made battling an energy-led surge in consumer prices a top priority and has repeatedly chided oil companies for earning bumper profits at a time of record gasoline prices.

Barrons.com

Exxon, Chevron, and 3 Other Dividend Aristocrat Stocks With Secure Payouts

Archer-Daniels Midland, Chevron, Exxon Mobil, General Dynamics, and Genuine Parts made our cut for the safest dividends of the S&P 500 Dividend Aristocrats.

SmartAsset

Why Senators Are Fighting to Help You to Buy More I Bonds Soon

I bonds are a very popular investment asset, especially in a time of market volatility – the guaranteed variable return is attractive in a time when other investments seem too risky. There’s only one major downside – you are limited … Continue reading → The post Senators Are Fighting to Help You to Buy More I Bonds Soon appeared first on SmartAsset Blog.

Bloomberg

Active Investing Outperforms in September Amid Brutal Stock Rout

(Bloomberg) — In an environment in which inflation remains entrenched and central banks continue to tighten, one strategy has done relatively well: active investing.Most Read from BloombergMusk Revives $44 Billion Twitter Bid, Aiming to Avoid TrialLoretta Lynn, Coal Miner’s Daughter And Country Queen, DiesElon Musk Sets Off Uproar in Ukraine by Tweeting His ‘Peace’ PlanMar-a-Lago Documents Included Pardons, Emails, Legal BillsStocks Trim Drop as Oil Giants Rally on OPEC+ Day: Markets WrapData f

The Wall Street Journal

Fed’s Rate Increases Defy All the Rules

Under Jerome Powell’s leadership, the central bank doesn’t conform to any consistent formulas that economists have long used to explain its decisions.

Barrons.com

Lumen Stock on Track for Lowest Close Since 1991 as Analyst Cites Risks to Dividend

Lumen Technologies shares tumbled Wednesday after an analyst at Wells Fargo cited concerns over risks to the telecommunication company’s dividend. Wells Fargo analyst Eric Luebchow downgraded shares of Lumen (ticker: LUMN) to Equal Weight from Overweight and cut his12-month price target to $8 from $12.50. Shares of Lumen fell 10% Wednesday to $7.22 and were on track for their lowest close since September 1991.

MarketWatch

Technology stocks are booming, and these four companies have staying power for years to come

Shares of technology companies from chip makers to FAANGs slumped for a third quarter at the end of September, as softer revenue, profit warnings and fading CEO confidence added to the doom. The backdrop is a widely expected economic recession next year, caused, in part, by aggressive Federal Reserve interest-rate increases to squash inflation.

Reuters

Musk’s move to close Twitter deal leaves Tesla investors worried

Elon Musk’s change of heart over his buyout deal for Twitter Inc was greeted with a wave of price target boosts on the social media company’s stock, although Tesla investors feared that the billionaire was spreading himself too thin. Musk, who sold over $15 billion worth of Tesla Inc shares earlier in the year to fund the deal, had threatened to abandon the takeover, citing a large number of fake accounts and inviting a lawsuit from Twitter to close the deal at the original offer price of $44 billion. While there was no insight into another round of potential stock sale from Musk, Wedbush analyst Dan Ives warned that the Tesla CEO’s interest in closing the deal would weigh on the company’s shares.

Barrons.com

Energy Stocks Are Rising on OPEC’s Production Cut

The oil cartel and its allies, including Russia, will cut production by two million barrels a day. The move is “very bullish,” says Goldman.

Motley Fool

Cathie Wood Goes Bargain-Hunting: 3 Stocks She Just Bought

Growth stocks roared back to life on Monday, and that was a dinner bell for Cathie Wood. The Ark Invest CEO, chief investment officer, and founder publishes her transactions daily across all of her exchange-traded funds. The more interesting additions to her portfolio on Monday were Tesla Motors (NASDAQ: TSLA), Roblox (NYSE: RBLX), and UiPath (NYSE: PATH).

Barrons.com

What’s Next for Twitter: Layoffs, a Purge of Spam Accounts, and Trump’s Return

Elon Musk has decided he wants to own Twitter after months of twists, and users should brace for drastic changes for the platform. On Tuesday, it was publicly revealed Musk has offered to end his court battle with Twitter (ticker: TWTR) and complete his acquisition of the social media company at the originally agreed upon price of $54.20 a share. Musk’s lawyers sent the proposal letter to Twitter a day earlier, and the company confirmed it has received it.

MarketWatch

1 in 5 retirees don’t see this expense coming — or its $315,000 pricetag

Only about one in four retirees has not experienced any kind of shock event in retirement, according to a study from the Society of Actuaries. “With retired clients, one of the bigger items that we talk about is how many months of distributions we want to set aside for extra money for unforeseen, or irregular expenses,” said Peter T. Palion, certified financial planner and president of Master Plan Advisory in East Norwich, New York. This is one of the most unforeseen expenditures in retirement, and includes the medical needs of a spouse, parent, child or grandchild, says Spencer Betts, a certified financial planner, chief compliance officer and financial consultant at Bickling Financial in Lexington, Massachusetts.

Post a Comment