3 Upgraded Semi-Conductors that Look Appealing

Brittney Barrett |

3 Upgraded Semi-Conductors that Look AppealingChips stocks have suffered from persistent volatility during 2011 as fear over weakened demand for consumer electronics and production interruptions following the earthquake and nuclear disaster in Japan. Those concerns appear to subsiding; however, at least according to UBS. The bank has upgraded a handful of semiconductor makers as of Monday trading, indicating the period of potential losses may be heading to a halt.

The selections for upgrade included Analog Devices (ADI), which UBS boosted to Buy from Neutral. PT outlook also improved from $32 to $38. After the recent sector upgrade, Analog seems to be ahead of some of its competitors in terms of a comeback. The stock’s current level seems to factor in continued challenges but a recent sector upgrade indicates the worst may be behind the semiconductor segment. Beyond the optimism toward semiconductors, Analog recently boasted improvements in communications equipment of over 20 percent and auto segments growth of around 12 percent. The company’s low P/E ratio of 12.5 versus its 5 year average of 17 makes Analog look attractive.

Texas Instruments (TXN)- Texas Instruments has noticed the weakening demand but has restructured its business strategy in order to achieve maximum profitability in the current market. The largest maker of analog chips recently increased its quarterly dividend by 31 percent after electing to concentrate on materials that generate larger margins.

The decision to shift to a greater percentage of analog and embedded processing technologies was drive by their ability to generate higher returns and help drive cash flow. UBS reacted by upgrading from Neutral to Buy with a $32 price target.

Maxim Integrated Products (MXIM)- Maxim has been the recipient of riding demand from phone producers and low exposure to  distributors. This, in addition to strong dividends prompted enthusiasm at UBS.  Maxim, a maker of linear and mixed-signal integrated circuits, is also benefitting from the notion that semis characteristically bottom with negative year-over-year unit growth, which is where things are at present. This means that Maxim could benefit from the natural swings of the market in addition to its individuals factors of demand.  The company was upgraded to a Buy from Neutral by UBS.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ETM Entercom Communications Corporation 16.00 -0.10 -0.62 114,140
ADI Analog Devices Inc. 73.14 -0.74 -1.00 2,106,681
TXN Texas Instruments Incorporated 71.99 -0.14 -0.19 6,101,234
MXIM Maxim Integrated Products Inc. 39.15 -0.29 -0.74 1,479,714

Comments

Emerging Growth

MGX Minerals Inc.

MGX Minerals is a diversified Canadian mining company listed on the Canadian Securities Exchange. MGX is engaged in the acquisition and development of industrial mineral deposits in western Canada that…

Private Markets

Airbnb

Airbnb is a community marketplace for people to list, discover, and book unique accommodations around the world — online or from a mobile phone. Whether an apartment for a night,…

8tracks

Our mission is to be the best place for people who care about music to create and discover thoughtfully curated playlists. In essence, 8tracks is a platform for online mixtapes.