Somewhat surprisingly, we have couple of tier-1 firms calling for a trading rally in Semi space. This comes after the Semiconductor Industry Association released revenue data for the month of May.
* Morgan Stanley notes that due to the usual recovery from a seasonally weak first quarter, the second quarter has historically offered the strongest sequential growth rate of the year, and without the adverse impact of MPUs and NAND, the rest of the industry appears to be growing at a historically normal rate. The firm expects most semiconductor companies to report second-quarter earnings results that will atleast meet consensus expectations.
Based on current valuations and belief that near-term fundamentals for the vast majority of companies are generally in line with expectations, they believe that a near-term rally is likely to occur as investors focus on the upcoming earnings season. However, as lead times decline, order momentum slows, and end market demand slows during the seasonally weak summer, they expect another solid and potentially better buying opportunity to exist for the average stock in firm's universe in the weeks ahead.
* Bear Stearns says their supply chain checks indicate improved order activities at the motherboard (MB) suppliers from a PC build stand-point, which makes them incrementally more constructive on PC component suppliers for 3Q. Firm views the MB shipment/forecast as a leading indicator for the PC component suppliers from a build stand-point, though not from an end demand standpoint.
Firm remains positive in INTC and notes that altough AMD shares have sold off, and are not expensive at 17x forward earnings (post option), they believe that the Street has not fully factored in the incremental weakness in June or the extent of the margin pressure because of the aggressive pricing environment.
Notablecalls: Not actionable but good to know category.
* Morgan Stanley notes that due to the usual recovery from a seasonally weak first quarter, the second quarter has historically offered the strongest sequential growth rate of the year, and without the adverse impact of MPUs and NAND, the rest of the industry appears to be growing at a historically normal rate. The firm expects most semiconductor companies to report second-quarter earnings results that will atleast meet consensus expectations.
Based on current valuations and belief that near-term fundamentals for the vast majority of companies are generally in line with expectations, they believe that a near-term rally is likely to occur as investors focus on the upcoming earnings season. However, as lead times decline, order momentum slows, and end market demand slows during the seasonally weak summer, they expect another solid and potentially better buying opportunity to exist for the average stock in firm's universe in the weeks ahead.
* Bear Stearns says their supply chain checks indicate improved order activities at the motherboard (MB) suppliers from a PC build stand-point, which makes them incrementally more constructive on PC component suppliers for 3Q. Firm views the MB shipment/forecast as a leading indicator for the PC component suppliers from a build stand-point, though not from an end demand standpoint.
Firm remains positive in INTC and notes that altough AMD shares have sold off, and are not expensive at 17x forward earnings (post option), they believe that the Street has not fully factored in the incremental weakness in June or the extent of the margin pressure because of the aggressive pricing environment.
Notablecalls: Not actionable but good to know category.
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