24/7 Wall St. » AMAT

After The Fall: Value & Upside In Chip Stocks As Summer Heat Awaits (INTC, QCOM, BRCM, NVDA, AMD, TSM, MU, FSL, SNDK, AMAT, ALTR, LRCX, SMH, XSD, USD)

Administrator — Thu, 24 May 2012 15:51:47 +0000

The recent sell-off has been brutal to semiconductors and chip stocks of late. To make matters worse, investing in technology and semiconductors can be brutal during the summer months. Still, many investors believe that where there is risk there is also reward and trying to nail an exact bottom is no easy task.

With warnings having started from key leaders in the realm of chip stocks, the question is whether or not you can trust the analysts and the consensus upside. 24/7 Wall St. has gone in and evaluated the leaders in each aspect of the semiconductor sector to see where there is value and where the risks currently lie. We evaluated the following chip companies: Intel Corporation (NASDAQ: INTC); QUALCOMM Incorporated (NASDAQ: QCOM); Texas Instruments Inc. (NASDAQ: TXN); Broadcom Corp. (NASDAQ: BRCM); NVIDIA Corporation (NASDAQ: NVDA); Advanced Micro Devices, Inc. (NYSE: AMD); Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM); Freescale Semiconductor Holdings (NYSE: FSL); SanDisk Corporation (NASDAQ: SNDK); Applied Materials Inc. (NASDAQ: AMAT); Lam Research Corporation (NASDAQ: LRCX); and Altera Corporation (NASDAQ: ALTR).

In a further effort to show just how much these have sold off, we have shown the moves in the following key semiconductor ETFs: Market Vectors Semiconductor ETF (AMEX: SMH); SPDR S&P Semiconductor (AMEX: XSD); and the ProShares Ultra Semiconductors (AMEX: USD). We have also run the same screens in retail, gold and silver miners, conglomerates, industrial giants, and major oil companies with links to those at the end of this article. Here is the screening of value and upside in the chip giants:

Intel Corporation (NASDAQ: INTC) traded at $26.60 with a market value of $129 billion. The consensus target price for the king of PC processors from Thomson Reuters is $29.75 and the 52-week trading range is $19.16 to $29.27. This DJIA component’s most recent yield was listed as 3.2%. Intel’s implied upside to the consensus target is 16% and it is worth noting that the consensus target is just above the 52-week high.

QUALCOMM Incorporated (NASDAQ: QCOM) traded at $57.78 with a market value of $99 billion. The consensus target price from Thomson Reuters is $71.92 and the 52-week trading range is $45.98 to $68.87. The CDMA giant yields about 1.7% after dividend hikes. The implied upside to the consensus target is just under 25% but we would note that the consensus target is still over $3.00 above the 52-week high.

Texas Instruments Inc. (NASDAQ: TXN) traded at $29.15 with a market value of $33.4 billion. The consensus target price from Thomson Reuters is $35.80 and the 52-week trading range is $24.34 to $35.30. The yield here is about 2.3%. TI’s implied upside to the consensus target is just under 23% and that target is still just above its 52-week high.

Broadcom Corp. (NASDAQ: BRCM) traded at $31.85 with a market value of $17.5 billion. The consensus target price from Thomson Reuters is $43.21 and the 52-week trading range is $27.59 to $39.66. Broadcom has a paltry yield of only about 1.2%, but its implied upside to the consensus target is about 35%. Be advised that this consensus target is almost $4.00 above the 52-week high.

NVIDIA Corporation (NASDAQ: NVDA) trades at $12.25 and its market cap is just over $7.5 billion. This graphics processor leader has a consensus target price of $16.64 and the 52-week trading range is $11.47 to $20.05. NVIDIA pays no dividend and that is something which it should consider changing since it has about $3 billion in cash and liquidity. Its implied upside to the consensus target is about 35% and that consensus target price is well under its 52-week high.

Advanced Micro Devices, Inc. (NYSE: AMD) trades at $6.06 and its market cap is only $4.25 billion despite it being so actively traded. The consensus target price for this distant number-2 in PC processors is $8.55 and the 52-week trading range is $4.31 to $8.71. AMD has no dividend due to very spotty earnings. Its implied upside to the consensus target is more than 41% if you trust the analysts here and its target price is just under its 52-week high.

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) currently trades at $14.15 for its ADR and Yahoo! Finance shows its market value being about $73 billion. The consensus target price from Thomson Reuters is $16.70 and the 52-week trading range is $10.75 to $16.15. The yield is listed as roughly 2.9%. TSM’s implied upside to the consensus target is 18% and the consensus target is about 4% above the 52-week high.

Freescale Semiconductor Holdings (NYSE: FSL) has been battered since its IPO and shares now trade at $9.75 with an implied market value of $2.4 billion. This private equity backed chip outfit’s consensus target price from Thomson Reuters is all the way up at $17.92 and the 52-week (less than one-year actually) trading range is $9.43 to $20.97. Freescale has NO DIVIDEND, which makes it stand out against the peer group now. Still, if you trust the analysts here the implied upside to the consensus target is a whopping 83%! Trust is hard to come by here, particularly for a company where backers will sell shares along the way into strength.

SanDisk Corporation (NASDAQ: SNDK) trades around $32.50 and its market value is about $7.9 billion. The king of flash memory’s consensus target price from Thomson Reuters is $44.46 and the 52-week trading range is $31.34 to $53.46. SanDisk has no current dividend, something which may need to change down the road considering that this is not anywhere close to a new company. Its implied upside to the consensus target is 37% but the company has had two warnings.

Applied Materials Inc. (NASDAQ: AMAT) currently trades at $10.55 and its market value is $13.6 billion. The consensus target price from Thomson Reuters is $13.65 and the 52-week trading range is $9.70 to $13.94. Applied now yields about 3.4% and its implied upside to the consensus target is about 29%.

Lam Research Corporation (NASDAQ: LRCX) is worth more than $4.5 billion today but it is acquiring Novellus Systems, Inc. (NASDAQ: NVLS) for about $3 billion in stock, so it will soon be larger. Its shares trade at $38.00, its consensus target price is $48.53 and the 52-week trading range is $34.81 to $48.88. Lam Research pays NO DIVIDEND now and its implied upside is almost 28%.

Altera Corporation (NASDAQ: ALTR) currently trades at $33.90 and its market value is $10.9 billion. The consensus target price from Thomson Reuters is $41.00 and the 52-week trading range is $30.39 to $48.91. Altera has a dink yield of only about 1% and we expect a dividend hike in the coming weeks or months. Its implied upside to the consensus target is about 21% and this one is well off highs and the target is almost $8.00 under its 52-week high.

Market Vectors Semiconductor ETF (AMEX: SMH) has undergone a total transformation since it is no longer the Semiconductor HOLDRs. At $31.25 its range since the change is listed as $28.86 to $36.17. This ETF is said to have assets of almost $400 million, but that changes based upon inflows and outflows on top of the change in the price.

SPDR S&P Semiconductor (AMEX: XSD) ETS is now one of the longest ETF in chips since the HOLDRS changed. At $43.50 now, its 52-week range is $40.09 to $59.85 and it still has only about $44 million in assets. This one peaked in January and the mix of components has made it more volatile than many leaders. This ETF would now have to rally by more than 37% to hit its 52-week high again.

ProShares Ultra Semiconductors (AMEX: USD) uses leverage of 2-times for its semiconductor trading, so this is one where it will feel just like getting your fingernails ripped out when your timing is wrong. At $33.50, this leveraged ETF has a 52-week range of $26.18 to $46.46. It would have to rally about 39% to hit its 52-week high again.

As you can see, the semiconductor and chip leaders have now pulled back substantially from their highs seen throughout 2012. The issue to consider is that Dell Inc. (NASDAQ: DELL) and Hewlett-Packard Co. (NYSE: HPQ) have confirmed that PC sales are slowing. Some of this is due to Apple Inc. (NASDAQ: AAPL) and some of it is due to weakness in Europe, weak PC spending in the Americas, and a slowing of growth in the BRIC nations. How the Microsoft Corporation (NASDAQ: MSFT) launch of Windows 8 will impact the PC refresh cycle ahead is now another wild card since PC sales guidance is looking softer than anticipated from just a couple of weeks ago.

We also want to warn investors to not just blindly trust the analysts in semiconductor price targets here. Summer can be a brutal time for chip stocks. The drop in the ProShares Ultra Semiconductors (AMEX: USD) during the summer of 2011 was about 40% and the drop from the 52-week high in 2011 to that end of summer trough was almost 50%.

The drop in the SPDR S&P Semiconductor ETF (AMEX: XSD) during the summer of 2011 was about 25%, but the drop from the peak in early 2011 here to the trough of late-summer was about 31%.

Summer is a very tough time to invest in chip stocks, and the question now is just how much the slowdown is going to continue taking out of chip stocks. We would certainly avoid trying to play the game of trying to catch falling knives here, but these are all worth keeping an eye on for those inflection points where the valuations start to adequately discount the warning signs.

Gold & Silver Miners with the Most Upside Value

Major Oil Companies with the Most Upside Value

Industrials with the Most Upside Value

Conglomerates with the Most Upside Value

Retail Stocks with Upside

JON C. OGG

Filed under: Consumer Electronics, Dividend, PC Companies, Semiconductor, Technology Companies, Value Investing Tagged: ALTR, AMAT, AMD, BRCM, DELL, FSL, HPQ, INTC, LRCX, MU, NVDA, QCOM, SMH, SNDK, TSM, USD, XSD

24/7 Wall St. Closing Bell — May 23, 2012 (FB, PCX, BX, AMAT, DELL, AEO, BIG, HRL, STP, TSL, FRED, HNZ, MMYT, TIF, TD, COST, PETM, STX)

Paul Ausick — Wed, 23 May 2012 20:05:55 +0000

The three major US stock indexes opened lower this morning after European leaders disagree on a fiscal response to the continent’s debt crisis(our coverage here). New US home sales were slightly above the consensus estimate, but made little difference in the slide. As the day wore on, more bad news from Europe sent crude oil prices tumbling and the dollar rising in the currency markets (our coverage here). The US dollar index rose today, now up 0.76% at 82.115. The GSCI commodity index is down fractionally at 628.23, with commodities mostly lower on the stronger dollar. Orange juice, cocoa, and cotton were today’s big losers. WTI crude oil closed down -2.1% at $89.90/barrel, its lowest settlement since October, and Brent crude trades down -2.51% at $105.69/barrel. Natural gas rose just 0.52% today to $2.72/thousand cubic feet. Gold settled down -1.8% today, at $1,548.40/ounce.

The unofficial closing bells put the DJIA down nearly 7 points to 12,496.07 (-0.05%), the NASDAQ rose about 11 points (0.39%) to 2,850.12, and the S&P 500 rose 0.17% or about 2 points to 1,318.85.

There were several analyst upgrades and downgrades today, including Facebook Inc. (NASDAQ: FB) started as ‘buy’ with a target price of $40 at Needham (more coverage here); Patriot Coal Corp. (NYSE: PCX) cut to ‘hold’ at Deutsche Bank; The Blackstone Group LP (NYSE: BX) raised ‘buy’ at Sterne Agee; Applied Materials Inc. (NASDAQ: AMAT) raised to ‘neutral’ at Goldman Sachs; and Dell Inc. (NASDAQ: DELL) cut to ‘neutral’ at Mizuho and maintained as ‘underperform’ with a $14 target price at Credit Suisse.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Dell is down -16.8% at $12.55 after posting a new 52-week low of $12.31 earlier today (more coverage here); American Eagle Outfitters Inc. (NYSE: AEO) is up 1.4% at $20.07; Big Lots Inc. (NYSE: BIG) is up 4% at $36.20; Hormel Foods Corp. (NYSE: HRL) is up 1.2% at $29.54; Suntech Power Holdings Co. Ltd. (NYSE: STP) is up 1.5% at $2.01 (more coverage here); and Trina Solar Ltd. (NYSE: TSL) is up 4.9% at $5.59.

Tomorrow we are scheduled to get earnings reports from Fred’s Inc. (NASDAQ: FRED), H.J. Heinz Co. (NYSE: HNZ), MakeMyTrip Ltd. (NASDAQ: MMYT), Tiffany & Co. (NYSE: TIF), The Toronto-Dominion Bank (NYSE: TD), and Costco Wholesale Corp. (NASDAQ: COST).

Other standouts from today include the following stocks:

PetSmart Inc. (NASDAQ: PETM) is up 13.3% at $62.99 after posting a new 52-week high of $63.19 earlier today. The company reported better-than-expected earnings and forecast more good things to come.

Seagate Technology PLC (NASDAQ: STX) is down -2.4% at $25.72. The disk drive maker is buying France-based LaCie SA for $186 million.

Stay tuned for Thursday. New York Fed President William Dudley is giving a speech. We have also noted the following events on the schedule (all times Eastern):

8:30 a.m. – Durable goods orders
8:30 a.m. – New claims for unemployment benefits
10:30 a.m. – EIA weekly natural gas storage report
11:00 a.m. – Kansas City Fed manufacturing index
1:00 p.m. – 7-year note auction
4:30 p.m. – Fed balance sheet and money supply

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AEO, AMAT, BIG, BX, COST, DELL, FB, FRED, HNZ, HRL, MMYT, PCX, PETM, STP, STX, TD, TIF, TSL

Top Analyst Upgrades & Downgrades (AMAT, ARBA, BX, CPLA, CHA, DELL, DNDN, EMC, FB, GMT, ICE, JAZZ, NDAQ, PCX, PG, SBUX, WY)

Administrator — Wed, 23 May 2012 12:22:37 +0000

These are some of the top analyst upgrades, downgrades and initiations seen in Wall Street research calls this Wednesday.

Applied Materials Inc. (NASDAQ: AMAT) Raised to Neutral at Goldman Sachs.

Ariba Inc. (NASDAQ: ARBA) Cut to Neutral at Goldman Sachs.

The Blackstone Group LP (NYSE: BX) Raised to Buy at Stern Agee.

Capella Education Co. (NASDAQ: CPLA) named Bear of the Day at Zacks.

China Telecom (NYSE: CHA) Raised to Outperform at Credit Suisse.

Dell Inc. (NASDAQ: DELL) Cut to Neutral at Mizuho; Maintained Underperform and target cut to $14 at Credit Suisse.

Dendreon Corporation (NASDAQ: DNDN) Started as Underperform at Jefferies; Maintained Hold with $11 target at Canaccord Genuity.

EMC Corp. (NYSE: EMC) Reiterated Buy with $36 target at Argus.

Facebook, Inc. (NASDAQ: FB) Started as Buy with $40 target at Needham.

GATX Corporation (NYSE: GMT) named Bull of the Day at Zacks.

IntercontinentalExchange, Inc. (NYSE: ICE) Raised to Buy at Deutsche Bank.

Jazz Pharmaceuticals (NASDAQ: JAZZ) Started as Outperform at Credit Suisse.

NASDAQ OMX Group (NASDAQ: NDAQ) Cut to Hold at Deutsche Bank.

Patriot Coal (NYSE: PCX) Cut to Hold at Deutsche Bank.

Procter & Gamble Co. (NYSE: PG) Reiterated Buy with $70 target at Argus.

Starbucks Corporation (NASDAQ: SBUX) Raised to Buy at BofA/ML.

Weyerhaeuser Co. (NYSE: WY) Started as Buy at Goldman Sachs.

If you enjoyed the top analyst upgrades and downgrades, you can join our free email newsletter that includes analyst summaries each morning sent right to your inbox. We also cover top issues such as IPOs, special financial exclusives, mergers and more. Sign up in the box below.

JON C. OGG

Filed under: Analyst Calls Tagged: AMAT, ARBA, BX, CHA, CPLA, DELL, DNDN, EMC, FB, GMT, ICE, JAZZ, NDAQ, PCX, PG, SBUX, WY

24/7 Wall St. Closing Bell — May 15, 2012

Paul Ausick — Tue, 15 May 2012 20:05:44 +0000

Two of the three major US stock indexes opened higher this morning as investors reacted to the news from Greece that no government could be formed and that a second election will be held next month. The news on German manufacturing was good (more coverage here) and US data was also mostly better, but not enough to deflect a weak opening. Equities moved higher later in the day, but overall the market looks set to close half a point lower than where it opened. The US dollar index rose today, now up 0.75% at 81.211. The GSCI commodity index is down about 1% at 639.40, with commodities mostly higher today, defying the stronger dollar. WTI crude oil closed down -0.8% at $93.98/barrel and Brent crude trades up 0.65% at $112.30/barrel. Gold settled down -0.3% today, at $1,557.10/ounce, the yellow metal’s lowest close of the year to date (more coverage here).

The unofficial closing bells put the DJIA down more than 63 points to 12,632.08 (-0.50%), the NASDAQ fell nearly 9 points (-0.30%) to 2,893.76, and the S&P 500 fell -0.57% or nearly 8 points to 1,330.66.

There were several analyst upgrades and downgrades today, including Amazon.com Inc. (NASDAQ: AMZN) raised to ‘outperform’ at Credit Suisse; Applied Materials Inc. (NASDAQ: AMAT) cut to ‘hold’ at Needham; Colgate-Palmolive Co. (NYSE: CL) raised to ‘buy’ at Argus; McDonald’s Corp. (NYSE: MCD) cut to ‘neutral’ at Cowen; and Phillips 66 (NYSE: PSX) started as ‘buy’ at Citigroup.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Renren Inc. (NYSE: RENN) is up 5.5% at $5.79; Agilent Technologies Inc. (NYSE: A) is up XX% at $XX; A123 Systems Inc. (NASDAQ: AONE) is up 4.5% at $40.63; Arctic Cat Inc. (NASDAQ: ACAT) is down -10.6% at $37.84; Dick’s Sporting Goods Inc. (NYSE: DKS) is up 6.8% at $50.45 after posting a new 52-week high of $51.65 earlier today; Saks Inc. (NYSE: SKS) is down -0.5% at $10.00; TJX Companies Inc. (NYSE: TJX) is up 7.1% at $42.50; Valspar Corp. (NYSE: VAL) is down -6.7% at $46.45, and The Home Depot Inc. (NYSE: HD) is down -2.6% at $48.61 (more coverage here).

On Wednesday we are scheduled to get earnings from 8×8 Inc. (NASDAQ: EGHT), Abercrombie & Fitch Co. (NYSE: ANF), Chico’s FAS Inc. (NYSE: CHS), Deere & Co. (NYSE: DE), Jack in the Box Inc. (NASDAQ: JACK), and Target Corp. (NYSE: TGT).

Other standouts from today include the following stocks:

Facebook Inc. (soon to be NASDAQ: FB) raised its IPO price range from from $28-$35 to $34-$38. It is possible the world will regain its balance following the company’s IPO, expected for Friday. But maybe not.

Patriot Coal Corp. (NYSE: PCX) is down -18.8% at $3.92 after posting a new 52-week low of $3.91 earlier today. The coal miner lowered shipment and price expectations this morning. More coverage here.

JPMorgan Chase & Co. (NYSE: JPM) is up 1.7% at $36.39. CEO Jamie Dimon dodged a bullet at today’s shareholder meeting and kept both his jobs.

Stay tuned for Wednesday. St. Louis Fed President James Bullard is giving a speech. We have also noted the following events on the schedule (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications
8:30 a.m. – Housing starts
10:30 a.m. – EIA weekly petroleum status report
2:00 p.m. – FOMC minutes released

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: A, ACAT, AMAT, AMZN, ANF, AONE, CHS, CL, DE, DKS, EGHT, FB, JACK, JPM, MCD, PCX, PSX, RENN, SKS, TGT, TJX, VAL

Top Analyst Upgrades & Downgrades

Administrator — Tue, 15 May 2012 12:28:07 +0000

These are some of the top analyst upgrades, downgrades and initiations seen in Wall Street research calls this Tuesday.

AAR Corporation (NYSE: AIR) named Bear of the Day at Zacks.

AGCO Corporation (NYSE: AGCO) named Bull of the Day at Zacks.

Akamai Technologies, Inc. (NASDAQ: AKAM) Raised to Buy at Janney Capital.

Amazon.com, Inc. (NASDAQ: AMZN) Raised to Outperform at Credit Suisse.

Applied Materials Inc. (NASDAQ: AMAT) Cut to Hold at Needham.

Colgate-Palmolive Co. (NYSE: CL) Raised to Buy at Argus.

Dominion Resources, Inc. (NYSE: D) Raised to Buy at Jefferies.

Flextronics International Ltd. (NASDAQ: FLEX) Raised to Buy at BofA/ML.

Groupon, Inc. (NASDAQ: GRPN) Raised to Buy at Citigroup; Raised to Buy at Stern Agee.

Infoblox Inc. (NYSE: BLOX) Started as Equal-weight at Morgan Stanley; Started as Overweight at Stephens; Started as Neutral at Goldman Sachs.

Jabil Circuit Inc. (NYSE: JBL) Raised to Buy at BofA/ML.

J.B. Hunt Transport Services Inc. (NASDAQ: JBHT) Started as Outperform at William Blair.

Juniper Networks, Inc. (NYSE: JNPR) Raised to Buy at BofA/ML.

McDonald’s Corporation (NYSE: MCD) Cut to Neutral at Cowen.

Par Pharmaceutical Companies Inc. (NYSE: PRX) named value stock of the day at Zacks.

Phillips 66 (NYSE: PSX) Started as Buy at Citigroup.

Prudential Financial, Inc. (NYSE: PRU) Cut to Hold at Argus.

Royal Bank of Scotland Group PLC (NYSE: RBS) Raised to Equalweight at Morgan Stanley.

Southern Company (NYSE: SO) Raised to Buy at Jefferies.

Total SA (NYSE: TOT) Raised to Buy at UBS.

JON C. OGG

Filed under: Analyst Calls Tagged: AGCO, AIR, AKAM, AMAT, AMZN, BLOX, CL, D, FLEX, GRPN, JBHT, JBL, JNPR, MCD, PRU, PRX, PSX, RBS, SO, TOT

Maybe LED Market Isn’t That Bad (VECO, AMAT, CREE, RBCN, LEDS, AIXG)

Paul Ausick — Tue, 01 May 2012 17:38:33 +0000

Veeco Instruments Inc. (NASDAQ: VECO) makes production equipment for LEDs and solar panels, so analysts weren’t too eager to forecast good news for the company’s first quarter. But after markets closed yesterday, Veeco reported adjusted EPS of $0.49 on revenue of $139.9 million, crushing the consensus EPS estimate of $0.19 and the revenue estimate of $126 million. Revenue and EPS were still way down from the first quarter of 2011, when the company posted revenue of $254.7 million and adjusted EPS of $1.44.

Had it not been for the collapse of the solar PV industry in 2011, the LED business would have gotten a lot more attention. Shares are down anywhere from -67% to -22% for LED-related companies like Applied Materials Inc. (NASDAQ: AMAT), Cree Inc. (NASDAQ: CREE), Rubicon Technology Inc. (NASDAQ: RBCN), SemiLEDS Corp. (NASDAQ: LEDS), and Aixtron SE (NASDAQ: AIXG).

SemiLEDS reported a smaller than expected loss about a month ago, but also said that negative gross margins would continue. In its forecast last night, Veeco said that revenue would total $120-$145 million in the second quarter and adjusted EPS would be $0.29-$0.48. The consensus estimates had been for revenue of $128.2 million and adjusted EPS of $0.23. The company expects to garner revenue of $500-$600 million for the full fiscal year.

The company’s CEO had this to say:

While [equipment] bookings grew modestly in the first quarter, we have not yet seen a clear inflection in customer buying patterns. LED customers remain cautious about capacity investment plans and it is still unclear when the [equipment] market will recover. Some positive signs are emerging, including increasing tool utilization rates in Korea, Taiwan and China, and a pick-up in customer quoting activity.

Veeco’s shares are up more than 14% today at $34.45 in a 52-week range of $20.35-$57.67. The other LED makers are also up, with Rubicon getting the biggest boost of about 7.6%. That’s probably because Rubicon has not yet reported first quarter results nor has the company set a date yet to do so.

Paul Ausick

Filed under: Earnings, Green Biz, Industry, Semiconductors, Technology, Technology Companies Tagged: AIXG, AMAT, CREE, LED lighting, LEDS, NASDAQ: AIXG, NASDAQ: AMAT, NASDAQ: CREE, NASDAQ: LEDS, NASDAQ: RBCN, NASDAQ: VECO, RBCN, semiconductor manufacturing equipment, VECO

Applied Materials Sinking on Lowered Outlook (AMAT)

Paul Ausick — Wed, 28 Mar 2012 15:31:02 +0000

Semiconductor equipment maker Applied Materials Inc. (NASDAQ: AMAT) today offered lower full-year EPS and revenue forecasts than analysts had been expecting, at the same time that the company’s CEO projected the total market for wafer-making equipment would exceed $30 billion again in 2012. The company’s CFO gave the bad news:

Applied expects continued strength in our core semiconductor business to result in fiscal year 2012 revenue for the company in the range of $9.1 to $9.5 billion. We expect non-GAAP earnings per share of $0.85 to $0.95, including $0.07 to $0.08 of operating losses from our Energy and Environmental Solutions group.

The consensus estimate for full-year EPS had been $0.96, while the revenue estimate called for $9.61 billion. Those operating losses are due to a downturn in demand for new equipment at solar makers:

As a result of the sharp capacity-driven downturn in our solar and display equipment markets, these businesses are focused on reducing costs to improve profitability.

Applied’s shares are down about -2% at $12.56 in a 52-week range of $9.70-$15.97.

Filed under: Earnings Warning, Industry, Semiconductor, Semiconductors, Technology Tagged: AMAT

Trying To Find Growth Potential in Solar Stocks (AMAT, FSLR, WFR, GTAT, SPWR, STP, TSL, LDK, JASO)

Paul Ausick — Wed, 22 Feb 2012 17:58:26 +0000

The solar sector took a severe beating in 2011 as module prices fell by more than 40%. The bleeding has stopped for now, and most of the solar makers have worked through their inventory problems and are looking forward to some improvement in the coming year.

It’s not to harsh to say that analysts have gotten pretty fed up with the solar makers. Price targets fell so low that they might have lost all meaning. Many of these companies have now risen past their targets, but it’s less a function of good performance and more a function of low expectations. We’ve looked nine solar-related companies to see what might be in store for them this year.

The stocks we’ve looked at are Applied Materials, Inc. (NASDAQ: AMAT), First Solar, Inc. (NASDAQ: FSLR), MEMC Electronic Materials, Inc. (NYSE: WFR), GT Advanced Technologies, Inc. (NASDAQ: GTAT), SunPower Corp. (NASDAQ: SPWR), Suntech Power Holdings Co. Ltd. (NYSE: STP), Trina Solar Ltd. (NYSE: TSL), LDK Solar Co. Ltd. (NYSE: LDK), and JA Solar Holdings Co. Ltd. (NASDAQ: JASO).

Applied Materials, Inc. (NASDAQ: AMAT) has a consensus target price of $14.47, and shares are trading today at $12.84, for an implied gain of 12.7%. Applied is the only company in this group that pays a dividend. The company hammered expectations in its first fiscal quarter and forecast revenues and earnings for its second quarter that were also above existing estimates. Demand for smartphones and tablets appears to be driving demand for the company’s foundry equipment, while Applied’s solar business posted revenue for the quarter that amounted to just a third of the division’s revenue in the same period a year ago.

First Solar, Inc. (NASDAQ: FSLR) has a consensus target price of $43.55, and shares are trading today at $40.78, for a potential upside of 6.8%. First Solar is the largest of the solar panel makers measured by market cap. The company’s low-cost leadership has been challenged by the constantly falling prices of crystalline solar manufacturers, and there’s little reason to expect a dramatic change here. A target price rise to $50 or so is likely, but could be out of reach.

MEMC Electronic Materials Inc. (NYSE: WFR) has a consensus target price of $6.14, and shares are trading today at $4.55, for an implied gain of 35%. MEMC posted a loss in its most recent quarter on soft demand for its chips. The company, like First Solar and SunPower, also owns a solar project development company, SunEdison, but there are scant hopes for any growth in utility-scale solar developments. Installations of rooftop systems may increase, but so far only SunPower has made any substantial move in that direction.

GT Advanced Technologies, Inc. (NASDAQ: GTAT) has a consensus target price of $12.70 and shares are trading today at $9.29, for an implied gain of nearly 37%. The company posted better-than-expected earnings for the fourth quarter, but didn’t offer an upside surprise on guidance. Formerly known as GT Solar, this company had a breakout first half of 2011 as the expansion of China’s manufacturing capacity created high demand for GT’s specialized manufacturing equipment. Now that capacity exceeds demand, new orders have slowed and prospects for growth are dimming.

Filed under: 24/7 Wall St. Wire Tagged: AMAT, FSLR, GTAT, JASO, LDK, SPWR, STP, TSL, WFR

Upside Expected In Top Semiconductor Stocks (INTC, AMD, MU, BRCM, QCOM, ARMH, SNDK, ALTR, AMAT, TXN)

Paul Ausick — Tue, 21 Feb 2012 18:49:58 +0000

Since the beginning of the year the Philadelphia Semiconductor Index is up about 17%. The run-up may be over for some chip makers and sustainable for others. Analysts have set some new target prices for a few of the chip makers, and others are pushing pushing on existing targets.

We’ve looked 10 leading semiconductor companies and evaluated their chances of reaching existing price targets during the coming year. The companies are Intel Corp. (NASDAQ: INTC), Advanced Micro Devices Inc. (NYSE: AMD), Micron Technology Inc. (NASDAQ: MU), Broadcom Corp. (NASDAQ: BRCM), Qualcomm Corp. (NASDAQ: QCOM), ARM Holdings plc (NASDAQ: ARMH), SanDisk Corp. (NASDAQ: SNDK), Altera Corp. (NASDAQ: ALTR), Applied Materials Inc. (NASDAQ: AMAT), and Texas Instruments Inc. (NYSE: TXN). Data comes from Yahoo! Finance and MarketWatch.

Intel Corp. (NASDAQ: INTC) has a consensus price target of $27.90 and current price around $27.32, for a potential upside of about 2%. Intel reported stellar earnings last month and the stock posted a new 52-week last Friday of $27.50. Sales of PCs have been good, and margins have remained high. The new Ultrabooks, which the company is supporting with a very strong marketing budget, could really push the company substantially higher. As of this moment though, shares are fully valued.

Advanced Micro Devices Inc. (NYSE: AMD) has a consensus price target of $7.00 and a current price around $7.38, leaving no upside. The company reported better-than-expected earnings for the fourth quarter and several analysts have boosted their target prices for the stock. The company’s shares have jumped 15% in the past month.

Micron Technology Inc. (NASDAQ: MU) has a consensus price target of $9.25 and a current price around $8.39, for a potential upside of 10.3%. In early January, the company’s price target was $8/share and the shares were trading at around $6.25. The tragic death of the company’s CEO in a plane crash weighed on the stock only briefly, and the company believes that memory prices have touched bottom.

Broadcom Corp. (NASDAQ: BRCM) has a consensus price target of $42 and a current price around $38.47, for a potential upside of 9.2%. Broadcom shares are up 30% since the beginning of the year The company recently completed its $3.7 billion acquisition of NetLogic in an effort to staunch the bleeding in its networking division.

Qualcomm Inc. (NASDAQ: QCOM) has a consensus price target of $71 and a current price around $62.85, for a potential upside of 13%. Qualcomm shares have gained nearly 15% since the beginning of the year and the share price is up more than $8. The company raised its guidance recently and analysts have followed suit.

ARM Holdings plc (NASDAQ: ARMH) has a consensus price target of $33.75 and a current price around $27.55, for a potential upside of more than 22%. ARM’s target price has jumped by nearly $7/share since the beginning of the year, but it is trading at nearly the same price as a month ago. Shares gained nearly 35% in the past year, but royalty payments are falling. One analyst firm reckons that ARM has a 10% cost advantage on its Windows-based notebooks (dubbed ‘WARM’) when compared with Wintel machines. The firm also estimates that ARM could capture 60% of the sub-$500 notebook market.

SanDisk Corp. (NASDAQ: SNDK) has a consensus price target of $60 and a current price around $47.76, for a potential upside of 25.6%. The potential gain on SanDisk shares has risen sharply in the past month, but SanDisk’s shares are down more than -3% so far this year after a nearly flat 2011. That’s not a sign that the potential gains are realistic. Apple’s recent acquisition of of a NAND maker could sharply curtail SanDisk’s sales of the chips for iPhones and iPads.

Altera Corp. (NASDAQ: ALTR) has a consensus price target of $43 and a current price around $39.95, for a potential upside of 7.6%. Altera’s price target was raised in January, and the company’s share price is about $3 higher than at the beginning of the year. But the most recent analyst action was a downgrade — never a good sign.

Applied Materials Inc. (NASDAQ: AMAT) has a median price target of $14.25 and a current price around $12.91, for a potential upside of 10.4%. AMAT’s shares have jumped nearly 20% since the beginning of January, and the price target has also moved up. Despite a good earnings report and an optimistic outlook, Applied may be a victim of concern about falling margins.

Texas Instruments Inc. (NYSE: TXN) has a consensus target price of $36.50 and a current price around $33.54, for a potential upside of 8.8%. The company’s target price is up $2.50/share since the beginning of the month, the old consensus price of $34 has proven to be a strong barrier.

Since the beginning of the year, Intel, AMD, and TI have essentially hit their target prices. The best bet now appears to be ARM, with a potential upside of 22% and some strong believers in the company’s coming tie-up with Microsoft.

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: ALTR, AMAT, AMD, ARMH, BRCM, INTC, MU, QCOM, SNDK, TXN

Top Earnings & Economic Previews For The Day Ahead (AAP, APA, AMAT, BIDU, ABX, DTV, DVA, DUK, ELNK, GM, LEAP, TAP, JWN, SPWR, WM, WWWW)

Administrator — Wed, 15 Feb 2012 20:50:00 +0000

Thursday is a fairly busy day for earnings expectations. We are expecting the following reports: Advance Auto Parts Inc. (NYSE: AAP); Apache Corporation (NYSE: APA); Applied Materials Inc. (NASDAQ: AMAT); Baidu Inc. (NASDAQ: BIDU); Barrick Gold Corporation (NYSE: ABX); DIRECTV, Inc. (NASDAQ: DTV); DaVita Inc. (NYSE: DVA); Duke Energy Corporation (NYSE: DUK); EarthLink Inc. (NASDAQ: ELNK); General Motors Co. (NYSE: GM); Leap Wireless International Inc. (NASDAQ: LEAP); Molson Coors Brewing Co. (NYSE: TAP); Nordstrom Inc. (NYSE: JWN); SunPower Corporation (NASDAQ: SPWR); Waste Management, Inc. (NYSE: WM); and Web.com Group Inc. (NASDAQ: WWWW). We have compiled some basic previews on each along with estimates from Thomson Reuters.

Advance Auto Parts Inc. (NYSE: AAP) shares almost hit a 52-week high on Wednesday. Estimates are $0.75 EPS and $1.32 billion in sales.

Apache Corporation (NYSE: APA) $2.87 EPS on $4.3 billion in revenue; watch for news on northern Africa operations.

Applied Materials Inc. (NASDAQ: AMAT) $0.12 EPS on $1.97 billion in sales; next quarter estimates are $0.16 EPS on $2.08 billion in sales. This report will have every chip cap-ex stock elsewhere looking closely.

Baidu Inc. (NASDAQ: BIDU) is the “Google of China’ by many investors… estimates are $0.91 EPS and $700.75 million in sales. Next quarter estimates are $0.83 EPS and $665.9 million in sales. Around $138 it is back in the middle of its 52-week trading range.

Barrick Gold Corporation (NYSE: ABX) $1.27 EPS and shares are in the lower half of the 52-week range.

DIRECTV, Inc. (NASDAQ: DTV) $0.92 EPS on $7.4 billion in sales; Team Buffett at Berkshire Hathaway added shares to the position.

DaVita Inc. (NYSE: DVA) $1.48 EPS on $1.85 billion in sales; Team Buffett added this as a new position for the Berkshire Hathaway holdings.

Duke Energy Corporation (NYSE: DUK) $0.21 EPS on $3.37 billion in revenue

EarthLink Inc. (NASDAQ: ELNK) is still around and acting as a business broadband provider rather than just a dial-up ISP of the days past. Estimates are $0.04 EPS and $349.23 million in sales.

General Motors Co. (NYSE: GM) $0.41 EPS and $38.2 billion in sales; GM is still a busted IPO but is trading down under 7-times 2012 expected earnings. Value, or value trap?

Leap Wireless International Inc. (NASDAQ: LEAP) -$1.11 EPS on $808 million in sales. Watch shares of MetroPCS Communications, Inc. (NYSE: PCS).

Molson Coors Brewing Co. (NYSE: TAP) $0.70 EPS

Nordstrom Inc. (NYSE: JWN) $1.10 EPS on $3.18 billion in sales

SunPower Corporation (NASDAQ: SPWR) was the ‘solar buyout that only got partly acquired’ and shares have been bashed. At $7.36, the 52-week range is $4.94 to $23.36. Earnings estimates are -$0.05 EPS on $669 million in sales.

Waste Management, Inc. (NYSE: WM) $0.60 EPS on $3.35 billion in revenue. The 3.8% yield may make more interest than in rival Republic Services.

Web.com Group Inc. (NASDAQ: WWWW) is expected to post $0.23 EPS and $93.95 million in sales. If all goes well, this one trades at less than 10-times expected 2012 earnings. It has been hard to not notice a high degree of advertising out of Web.com of late.

Thursday’s Economic Data:

8:30 AM EST Weekly Jobless Claims (365K est.)

8:30 AM EST January Housing Starts (677K est.)

8:30 AM EST January PPI (+0.4% es.)

9:00 AM EST Fed Chairman Ben Bernanke speaks on community banking

10:00 AM EST Treasury’s Geithner speaks to Senate Budget Committee

10:00 AM EST February Philly Fed

10:30 AM EST Weekly Natural Gas inventories

4:30 PM EST Feb. 15 Foreign Central Bank Treasury Holdings

JON C. OGG

Filed under: 24/7 Wall St. Wire, Calendar, Earnings Tagged: AAP, ABX, AMAT, APA, BIDU, DTV, DUK, DVA, ELNK, GM, JWN, LEAP, SPWR, TAP, WM, WWWW