Micron’s stock boosts chip rally after upgrade, analysts’ comments at CES
Chip-maker stocks finished higher Wednesday after one analyst upgraded Micron Technology Inc. and other analysts gave their roundups on other companies at the annual CES tech confab in Las Vegas.
The PHLX Semiconductor Index SOX, +2.52% rallied 2.5% Wednesday, outpacing broader index gains as the Dow Jones Industrial Average DJIA, +0.39% and the S&P 500 SPX, +0.41% both advanced 0.4%, and the tech-heavy Nasdaq Composite Index COMP, +0.87% gained 0.9%.
Micron MU, +5.04% shares were one of the leading gainers on the SOX index after Bernstein analyst Mark Newman upgraded the chip maker’s stock to outperform on a more favorable risk-reward profile even though the company faces oversupply problems in the memory-chip market. Micron shares finished up 5% at $35.44.
Micron shares are 45% off their 52-week high of $64.66, down nearly 18% over the past 12 months, but are up nearly 12% for the year so far. In comparison, the SOX index is nearly 19% off its 52-week high, down 10% over the past 12 months, but up 3% for the year.
Of the 34 analysts who cover Micron, 21 have buy or overweight ratings, 12 have hold ratings and one has a sell rating, according to FactSet.
Skyworks Solutions Inc. SWKS, +3.83% shares finished up 3.8% at $67.69 even though analysts lowered price targets and estimates in response to the company cutting its outlook.
On Tuesday, Skyworks forecast fiscal first-quarter adjusted earnings of $1.81 to $1.84 a share on revenue of about $970 million, down from a previous forecast of about $1.91 a share on revenue of $1 billion to $1.02 billion. Analysts now estimate earnings of $1.85 a share on revenue of $983.9 million.
Canaccord analyst T. Michael Walkley lowered his price target on Skyworks to $84 from $96 on weaker smartphone demand from its leading customers, Apple Inc. AAPL, +1.70% and Samsung 005930, +3.94% . Similarly, nine other analysts cut their price targets, resulting in an average target of $83.88, according to FactSet.
Of the 29 analysts who cover Skyworks, 14 have buy or overweight ratings, 14 have hold ratings and one has a sell rating, according to FactSet.
Skyworks shares dropped 10% the day after Apple cut its holiday forecast on iPhone and China weakness last week, but have since recovered to their pre-Apple-warning levels.
Nvidia Corp. NVDA, +1.97% shares rose 2% to close at $142.58 Wednesday following the company’s Monday launch of its lower-priced Turing-architecture RTX 2060 graphics card at CES.
Benchmark analyst Gary Mobley, who has a buy rating on Nvidia, said the most important takeaway from the company’s CES presentation was that its $600 million in Pascal-architecture chip inventory should be cleared out by the end of the April quarter.
“We believe the RTX 2k GPUs should drive a significant upgrade cycle for NVDA’s installed base of ~200M older-gen GeForce users,” Mobley said in a Wednesday note. “When NVDA launched the Pascal-based GeForce GTX 1k-series GPUs in 2016, it had an active GeForce installed base of only ~80M, and following the release of GTX 1k, NVDA’s Gaming sales accelerated to 50%+ in the following yr.”
Oppenheimer analyst Rick Schafer, who has an outperform rating, said in a Wednesday note he sees Nvidia as a rare secular growth and gross-margin expansion story in the chip space, but it needs to get through its short-term difficulties.
“We’re surprised by magnitude/duration of Pascal inventory correction, but view it as transitory,” Schafer said. “We see macro uncertainty, ongoing semiconductor correction and channel inventory keeping a lid on shares near term.”
The only decliner on the SOX Index was Advanced Micro Devices Inc. AMD, -2.70% , with shares falling 2.7% to close at $20.19 as the chip maker introduced its Radeon VII gaming GPU.
Unsurprisingly, when MarketWatch asked Nvidia Chief Executive Jensen Huang at CES about his competitor’s chip, he panned it.
Other notable chip companies with gains of 3% or more on Wednesday included ON Semiconductor Corp. ON, +7.68% , Applied Materials Inc. AMAT, +4.22% Broadcom Inc. AVGO, +4.32% , Lam Research Corp. LRCX, +5.16% , Cirrus Logic Inc. CRUS, +4.56% , Microchip Technology Inc. MCHP, +3.96% and Teradyne Inc. TER, +3.64% .
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