24/7 Wall St. » NVLS

24/7 Wall St. Closing Bell (MRO, PEET, RIMM, URBN, CHK, GILD, GNW, PCCC, NVLS, PKI, BEAM, EL, WY, THLD, TUDO, ZOLT, STRI, MNKD)

Paul Ausick — Fri, 03 Feb 2012 21:09:33 +0000

Major indexes reacted positively to this morning’s non-farm payrolls report and the drop in the US unemployment rate from 8.5% to 8.3%. Expectations for the unemployment rate had been no better than flat, and jobs growth of 243,000 was also a big surprise. The report ISM service jobs was also higher than expected this morning, although data on new factory orders was lower than expected. The Nasdaq composite posted an 11-year high today, and yields on US Treasuries also rose as investors headed into equities. Crude oil rose sharply today on the good economic news. WTI crude is up 1.32% at $97.63/barrel and Brent crude is up 2.10% at $114.42/barrel. Gold, as might be expected, dropped -1.64% today to $1,730.50/ounce.

The unofficial closing bells put the DJIA up nearly 157 points to 12,862.23 (1.23%), the NASDAQ rose nearly 46 points (1.61%) to 2,905.66, and the S&P 500 rose 1.46% or more than 19 points to 1,344.90.

There were several analyst upgrades and downgrades today, including Marathon Oil Corp. (NYSE: MRO) cut to ‘hold’ at Argus; Peet’s Coffee & Tea Inc. (NASDAQ: PEET) raised to ‘outperform’ at Baird; Research in Motion Ltd. (NASDAQ: RIMM) cut to ‘underperform’ at Jefferies; Urban Outfitters Inc. (NASDAQ: URBN) raised to ‘buy’ at Janney Capital; and Chesapeake Energy Corp. (NYSE: CHK) started as ‘neutral’ 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: Gilead Sciences Inc. (NASDAQ: GILD) is up more than 11% at $54.83 after posting a new 52-week high of $54.90 earlier (see our coverage here); Genworth Financial Inc. (NYSE: GNW) is up more than 13% at $9.12; PC Connection Inc. (NASDAQ: PCCC) is down nearly -20% at $10.22; Novellus Systems Inc. (NASDAQ: NVLS) is down -0.73% at $48.98, but posted a new 52-week high of $49.92 earlier in the day; PerkinElmer Inc. (NYSE: PKI) is up more than 6% at $26.21; Beam Inc. (NYSE: BEAM) is up 2.4% at $54.28; Estee Lauder Cos. Inc. (NYSE: EL) is down -3.64% at $56.71 (more coverage here); and Weyerhaeuser Co. (NYSE: WY) is up more than 5% at $21.19.

Other standouts from today include the following stocks:

Threshold Pharmaceuticals Inc. (NASDAQ: THLD) is up nearly 115% at $2.77. The pharmaceuticals firm has announced a global development deal with Germany’s Merck.

Tudou Holdings Ltd. (NASDAQ: TUDO) is up nearly 19% at $16.66. The Chinese online video company has signed a deal with Sina Corp. (NASDAQ: SINA) to provide a video platform for Sina Weibo, a Twitter-like social site.

Zoltek Cos. Inc. (NASDAQ: ZOLT) is up nearly 39% at $13.14. The specialty fibers maker posted good earnings number and forecast continued growth in the market for wind turbines which use its carbon fibers in blade construction.

STR Holdings Inc. (NASDAQ: STRI) is down nearly -20% at $9.08. The company manufactures materials used in solar PV modules, and lowered its fourth-quarter guidance this morning.

Mannkind Corp. (NASDAQ: MNKD) is down nearly -13% at $2.15 after posting a new 52-week low of $2.14 earlier. The biotech company has priced its public offering of units containing one share of stock and warrant to purchase another 0.6 shares. More coverage here.

Stay tuned for Monday. We have noted the following events on the schedule (all times Eastern):

11:30 a.m. – 3- and 6-month Treasury bill auction
3:00 p.m. – Treasury STRIPS

Have a great weekend.

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: BEAM, CHK, EL, GILD, GNW, MNKD, MRO, NVLS, PCCC, PEET, PKI, RIMM, STRI, THLD, TUDO, URBN, WY, ZOLT

Top Analyst Upgrades & Downgrades (CAL, HAL, HMY, HD, IBI, KLAC, KORS, NFLX, NIHD, NVLS, PAAS, TXN, UNP, ZUMZ)

Administrator — Tue, 24 Jan 2012 13:14:33 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Tuesday morning.

Caterpillar, Inc. (NYSE: CAT) Raised to Outperform as Bull of the Day at Zacks.
Halliburton Co. (NYSE: HAL) Reiterated Buy but lowered target to $54 at Argus.
Harmony Gold Mining Co. Ltd. (NYSE: HMY) Raised to Buy at UBS.
Home Depot Inc. (NYSE: HD) Reiterated Buy and raised price target to $51 at Argus.
Interline Brands, Inc. (NYSE: IBI) named as Value stock of the day at Zacks.
KLA-Tencor Corporation (NASDAQ: KLAC) Raised to Buy at Citigroup.
Michael Kors Holdings Limited (NYSE: KORS) Started as Overweight at Morgan Stanley; Started as Outperform at Baird; Started as Buy at Goldman Sachs.
Netflix, Inc. (NASDAQ: NFLX) Maintained Outperform with $100 target at Credit Suisse.
NII Holdings, Inc. (NASDAQ: NIHD) Cut to Underperform as Bear of the Day at Zacks.
Novellus Systems, Inc. (NASDAQ: NVLS) Raised to Buy at Citigroup.
Pan American Silver Corp. (NASDAQ: PAAS) maintained Outperform but lowered estimates at Credit Suisse.
Texas Instruments Inc. (NYSE: TXN) Reiterated Outperform and raised target to $40 at Credit Suisse; Cut to Hold at Kaufman Bros.
Union Pacific Corp. (NYSE: UNP) Reiterated Buy and raised target to $130 at Argus.
Zumiez Inc. (NASDAQ: ZUMZ) Cut to Neutral at Credit Suisse.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Filed under: Analyst Calls Tagged: CAL, HAL, HD, HMY, IBI, KLAC, KORS, NFLX, NIHD, NVLS, PAAS, TXN, UNP, ZUMZ

Top Analyst Upgrades & Downgrades (AMGN, T, BAX, BHP, FFIV, AWAY, M, MAA, NVLS, OPEN, SFD, URBN, WWWW)

Administrator — Tue, 20 Dec 2011 13:35:49 +0000

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

Amgen Inc. (NASDAQ: AMGN) Added to Strong Buy List at Zacks Investment Research.
AT&T Inc. (NYSE: T) Cut to Neutral at JPMorgan.
Baxter International Inc. (NYSE: BAX) Reduced to Outperform from the “Top Pick” and target lowered to $58 from $61 by RBC Capital Markets.
BHP Billiton Ltd. (NYSE: BHP) cut to Underperform and named as Bear of the Day at Zacks Investment Research.
F5 Networks, Inc. (NASDAQ: FFIV) Raised to Outperform from Perform at Oppenheimer.
HomeAway, Inc. (NASDAQ: AWAY) Started as Neutral at Credit Suisse.
Macy’s Inc. (NYSE: M) named as value stock of the day at Zacks Investment Research.
Mid-America Apartment Communities Inc. (NYSE: MAA) Raised to Outperform at Keefe Bruyette & Woods.
Novellus Systems, Inc. (NASDAQ: NVLS) Cut to Neutral from Overweight at JPMorgan.
OpenTable Inc. (NASDAQ: OPEN) Started as Outperform with a $49.00 price target objective at Credit Suisse.
Smithfield Foods Inc. (NYSE: SFD) named as Bull of the Day at Zacks Investment Research.
Urban Outfitters Inc. (NASDAQ: URBN) Raised to “Top Pick” from Outperform at FBR Capital Markets.
Web.com Group, Inc. (NASDAQ: WWWW) Started as Overweight at JPMorgan.

JON C. OGG

Filed under: Analyst Calls Tagged: AMGN, AWAY, BAX, BHP, FFIV, M, MAA, NVLS, OPEN, SFD, T, URBN, WWWW

24/7 Wall St. Closing Bell (CSCO, FSLR, SI, BRCM, AFFY, DFS, FDX, PIR, SCHL, WGO, SONO, NVLS, GEVO, ZOLL, BPAX, PEIX)

Paul Ausick — Thu, 15 Dec 2011 21:05:03 +0000

US markets opened fast this morning, up nearly 1% in the first hour of trading before giving most of the gain back by mid-morning and then wandering around a gain of less than 0.5% for the rest of the day. Better manufacturing data from Europe, and solid manufacturing gains in the US helped the market in the early going. The US dollar was down against the euro, the yen, and the British pound. Crude oil prices fell today, with WTI down more than -1.5% at $93.44/barrel and Brent down about -0.9% at $103.33. Gold continued its slide as well today, down more than -1% at $1,568.80/ounce.

The unofficial closing bells put the DJIA up nearly 47 points to 11,869.95 (0.39%), the NASDAQ rose nearly 2 points (0.07%) to 2,541.01, and the S&P 500 rose 0.33% or about 4 points to 1,215.83.

There were several analyst upgrades and downgrades today, including Cisco Systems Inc. (NASDAQ: CSCO) started as ‘buy’ at Nomura. Other ratings actions today include First Solar Inc. (NASDAQ: FSLR) cut from ‘buy’ to ‘neutral’ at R.W. Baird; Siemens AG (NYSE: SI) cut from ‘buy’ to ‘neutral’ at Goldman Sachs; Broadcom Corp. (NASDAQ: BRCM) raised to ‘outperform’ at Wells Fargo; and Affymetrix Inc. (NASDAQ: AFFY) raised from ‘neutral’ to ‘buy’ at Goldman Sachs.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Discover Financial Services (NYSE: DFS) is down -3.2% at $23.06; FedEx Corp. (NYSE: FDX) is up almost 8% at $83.45; Pier 1 Imports, Inc. (NYSE: PIR) is up 0.23% at $13.17; Scholastic Corp. (NASDAQ: SCHL) is up more than 4% at $26.73; and Winnebago Industries, Inc. (NYSE: WGO) is down -0.15% at $6.80.

Other standouts from today include the following stocks:

SonoSite Inc. (NASDAQ: SONO) is up more than 27% at $53.68, a new 52-week high. The ultrasound device maker has been acquired by Japan’s Fujifilm Holdings Inc. for $54/share, or about $995 million. Our coverage is here.

Novellus Systems, Inc. (NASDAQ: NVLS) is up more than 17% at $40.68, after posting a new 52-week high of $42.50 earlier today. The semiconductor equipment maker is being acquired by Lam Research Corp. (NASDAQ: LRCX) for $3.3 billion in an all-stock deal. More coverage here.

Gevo Inc. (NASDAQ: GEVO) is up more than 13.5% at $6.41. The biofuel and chemical company signed an agreement with The Coca-Cola Co. (NYSE: KO) to develop a new bio-derived plastic bottle.

Zoll Medical Corp. (NASDAQ: ZOLL) is up more than 29% at $60.47, after posting a new 52-week high earlier today of $63.86. The medical device maker’s wearable defibrillator has been re-affirmed for Medicare coverage.

BioSante Pharmaceuticals, Inc. (NASDAQ: BPAX) is down more than -77% at $0.48, after posting a new 52-week low of $0.46 earlier today. The biopharmaceutical company reported that its experimental drug to enhance libido in post-menopausal women failed a late-stage trial.

Pacific Ethanol Inc. (NASDAQ: PEIX) is down nearly -18% at $0.87. The ethanol maker announced the completion of a sale of about 12.6 million shares and warrants to 11 private investors for just over $8 million in cash.

Stay tuned for Friday. Chicago Federal Reserve Bank President Charles Evans and Dallas Federal Reserve Bank President Richard Fisher are speaking tomorrow. Here is another other noteworthy event on the schedule (all times Eastern):

8:30 a.m. – Consumer price index for November released

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AFFY, BPAX, BRCM, CSCO, DFS, FDX, FSLR, GEVO, NVLS, PEIX, PIR, SCHL, SI, SONO, WGO, ZOLL

Acquisition in Semiconductor Equipment Sector (LRCX, NVLS, INTC, TXN)

Paul Ausick — Thu, 15 Dec 2011 12:12:29 +0000

Semiconductor equipment maker Lam Research Corp. (NASDAQ: LRCX) will acquire competitor Novellus Systems Inc. (NASDAQ: NVLS) in an all-stock deal worth an estimated $3.3 billion. Novellus shareholders will receive 1.125 shares of Lam Research stock for each share of Novellus stock they own. That represents a premium of about 28% over last night’s closing price for Novellus stock.

The companies are complementary, each specializing in a different bit of the chip equipment making business. Some chip makers, notably Intel Corp. (NASDAQ: INTC) and Texas Instruments Inc. (NYSE: TXN) have lowered guidance for 2012, and sales estimates for the chip industry are nearly -20% lower next year. A single company offering a wider range of equipment has a better chance of surviving than do two smaller, more specialized firms.

Lam has also said that it will begin buying back up to $1.6 billion in stock following the close of the transaction, which is expected to happen in the second quarter of 2012. Lam expects the buyback program to be completed within 12 months.

The cleverly structured deal is tax-free to shareholders and the buyback program means that Lam is paying about 48% of the acquisition price in cash. When the deal closes, Lam shareholders will own about 59% of the new company and Novellus shareholders will own about 41%. The surviving company will retain the Lam name.

Filed under: 24/7 Wall St. Wire Tagged: INTC, LRCX, NVLS, TXN

Media Digest (12/15/2011) Reuters, WSJ, NYTimes, FT

247wallst — Thu, 15 Dec 2011 09:35:53 +0000

Olympus may hire its former CEO, Michael Woodford, in the midst of an accounting scandal. (Reuters)

Foreign investment in China drops for the first time in 28 months. (Reuters)

Holiday sales continue to tick higher, according to the National Retail Federation. (Reuters)

Sony (NYSE: SNE) confirms its 2011 and 2012 targets for PS3 sales. (Reuters)

Amazon.com (NASDAQ: AMZN) shares lose 2011 gains because of concerns about margins. (Reuters)

Lam Research (NASDAQ: LRCX) to buy Novellus Systems (NASDAQ: NVLS) for $3.3 billion. (Reuters)

The SEC will try to appeal a federal ruling that blocked a settlement with Citigroup (NYSE: C) over toxic mortgage debt. (WSJ)

Wage increases in China cause the costs of its exports to the U.S. to rise. (WSJ)

Research In Motion (NASDAQ: RIMM) is under pressure to replace senior management. (WSJ)

Shares of Groupon (NASDAQ: GRPN) fall as research firms cut ratings. (WSJ)

Nokia (NYSE: NOK) returns to the U.S. with a $50 smartphone with T-Mobile service. (WSJ)

E-book prices rise quickly. (WSJ)

EU leaders continue to move away from the solid front they had last week. (WSJ)

The NFL signs new nine-year deals with Fox, NBC and CBS, which will pay an average of 65% more than their previous arrangements. (WSJ)

More oil companies seek leases for Gulf of Mexico drilling. (WSJ)

Brazil will try to shutter the operations of Chevron (NYSE: CVX) and Transocean (NYSE: RIG) as the government attempts to collect $11 billion over leak damages. (WSJ)

First Solar (NASDAQ: FSLR) sharply cuts forecasts. (WSJ)

LightSquared’s high-speed internet would hurt GPS signals, according to the federal government. (WSJ)

Credit Agricole sharply cuts expenses in the face of the EU crisis. (WSJ)

Detroit sells $484 million in bonds but at very high rates. (WSJ)

Charles Schwab (NYSE: SCHW) and E*Trade Financial (NASDAQ: ETFC) are hurt by drops in trading volume. (WSJ)

China puts tariffs on U.S. cars with large engines. (NYT)

OPEC increases output levels. (NYT)

IBM (NYSE: IBM) settles an antitrust case with the EU. (NYT)

Foreign-owned banks in the U.S. are losing deposits on a flight to safety. (FT)

Douglas A. McIntyre

Filed under: Private Equity Tagged: AMZN, C, CVX, ETFC, FSLR, GRPN, IBM, LRCX, NOK, NVLS, RIG, RIMM, SCHW, SNE

Earnings Season Arrives, Top Earnings Previews For The Week Ahead (NVLS, AA, ADTN, HST, PEP, GOOG, JBHT, JPM, SWY, MAT)

Administrator — Fri, 07 Oct 2011 17:15:40 +0000

They’re Here! Next week will launch the corporate earnings season for the third quarter. The media is going to tell you that this is the most important earnings season in quite some time. The media always says that, but this time it is true because investors want to know whether to still model in growth or whether they need to dig in for a recessionary climate.

24/7 Wall St. has compiled detailed earnings previews for the following companies: Novellus Systems Inc. (NASDAQ: NVLS); Alcoa Inc. (NYSE: AA); ADTRAN Inc. (NASDAQ: ADTN); Host Hotels and Resorts Inc. (NYSE: HST); Pepsico Inc. (NYSE: PEP); Google Inc. (NASDAQ: GOOG); J. B. Hunt Transport Services Inc. (NASDAQ: JBHT); J.P. Morgan Chase & Co. (NYSE: JPM); Safeway Inc. (NYSE: SWY); and Mattel Inc. (NASDAQ: MAT).

Some of these companies will not really seem on the surface to be sector-movers or market-moving companies, but these have been selected because they are the first ones of their peer groups to be reporting earnings.

We have created a detailed earnings preview for each with consensus estimates from Thomson Reuters and added color in on each for investors to see what exactly is worth consideration this earnings season. We have also added in recent price history and named where to look for additonal action (or fallout).

Monday, October 10

Novellus Systems Inc. (NASDAQ: NVLS) is the first chip equipment player to report for this earnings season. it has been a few weeks since we have had earnings reports or guidance in the sector so we will be paying close attention since so many companies that are chip equipment customers have talked down their numbers in recent weeks. Our belief is that expectations are very low for the quarter ahead. Estimates are $0.68 EPS and $311.9 million in revenue; next quarter estimates are $0.50 EPS and $278.5 million in revenue. With shares hovering around $30.00 on Friday, the 52-week range is $25.26 to $41.82 and shares were above $36 in early July. After Novellus reports, we would be watching the following: Applied Materials Inc. (NASDAQ: AMAT), KLA-Tencor Corporation (NASDAQ: KLAC), and Lam Research Corporation (NASDAQ: LRCX).

Tuesday, October 11

Alcoa Inc. (NYSE: AA) has already talked down aluminum prices and we have already seen slowing demand out of China talked about by many sectors. Alcoa keeps maintaining that it can double its business by 2020 and we do not expect that to be changed by management even if it guides lower expectations ahead. Estimates are $0.23 EPS and $6.24 billion in revenue; next quarter estimates are $0.23 EPS and $6.11 billion in revenue. At $9.80 on Friday, the 52-week range is $8.45 to $19.47 and this one was above $16 at the start of July. There are many metals stocks to watch, some in aluminum and some in other metals: Century Aluminum Co. (NASDAQ: CENX), Reliance Steel & Aluminum Co. (NYSE: RS); Kaiser Aluminum Corporation (NASDAQ: KALU); Titanium Metals Corporation (NYSE: TIE); and Nucor Corporation (NYSE: NUE).

Filed under: Calendar, Corporate Governance, Earnings, Earnings Warning, Economy, Editor's Picks Tagged: AA, ADTN, AMAT, BAC, C, CENX, CHH, CIEN, GOOG, HAS, HST, JBHT, JPM, KALU, KLAC, KO, KR, LRCX, LSTR, MAR, MAT, NUE, NVLS, PEP, RS, SWY, TIE, TLAB, WFC

Top Analyst Upgrades & Downgrades (AAPL, CAT, CHTR, CL, CMCSA, CMA, DE, DTV, IFT, KMB, LRCX, MW, NVLS, NTRI, RL, TEVA, PAY, WCRX)

Administrator — Wed, 28 Sep 2011 12:17:59 +0000

These are some of this Wednesday’s top analyst upgrades, downgrades, and initiations seen having an impact from Wall Street research calls.

Apple Inc. (NASDAQ: AAPL) Started as Buy with $495 target at Janney.
Caterpillar Inc. (NYSE: CAT) Started as Overweight at Barclays.
Charter Communications Inc. (NASDAQ: CHTR) Started as Overweight at JPMorgan.
Colgate-Palmolive Co. (NYSE: CL) Cut to Hold at Citigroup.
Comcast Corporation (NASDAQ: CMCSA) Started as Overweight at JPMorgan.
Comerica Incorporated (NYSE: CMA) Raised to Market Perform at Wells Fargo.
Deere & Co. (NYSE: DE) Started as Overweight at Barclays.
DIRECTV (NASDAQ: DTV) Started as Overweight at JPMorgan.
Imperial Holdings, LLC (NYSE: IFT) Cut to Market Perform at FBR.
Kimberly-Clark Corporation (NYSE: KMB) Cut to Hold at Citigroup.
Lam Research Corporation (NASDAQ: LRCX) Started as Overweight at JPMorgan.
Men’s Wearhouse Inc. (NYSE: MW) named value stock of the day at Zacks.
Novellus Systems, Inc. (NASDAQ: NVLS) Started as Overweight at JPMorgan.
NutriSystem Inc. (NASDAQ: NTRI) Started as Buy at Auriga.
Polo Ralph Lauren Corp. (NYSE: RL) Cut to Hold at Citigroup.
Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) Started as Buy at Canaccord Genuity.
VeriFone Systems, Inc (NYSE: PAY) Started as Buy at Argus.
Warner Chilcott plc (NASDAQ: WCRX) Started as Buy at Canaccord Genuity.

JON C. OGG

Filed under: Analyst Calls Tagged: AAPL, CAT, CHTR, CL, CMA, CMCSA, DE, DTV, IFT, KMB, LRCX, MW, NTRI, NVLS, PAY, RL, TEVA, WCRX

The Week’s Largest Stock Market Losers: GameStop Corp, Monster Worldwide Inc, And Capital One Financial Corp

247wallst — Sat, 16 Jul 2011 12:40:41 +0000

The S&P 500 stocks which lost the most were mostly from the tech sector. Microchip Technology Inc (NASDAQ: MCHP) was down almost 16%. The company cut it earnings guidance which was done to some extent because of the impact of the Japanese earthquake. Novellus Systems Inc. (NASDAQ: NVLS) dropped over 12% because it warned about 2011 results.

Citrix Systems Inc. (NASDAQ: CTXS) fell 10% after it announced it would buy Cloud.com. Analog Devices Inc (NASDAQ: ADI) fell 9% as other shares in its sector were punished by poor results

S&P 500 WEEK: BOTTOM 10 (08 JUL – 14 JUL)	Ticker	Weekly Price Change (%)	Close Price 14Jul11	Close Price 8Jul11	Market Cap ($Mil)
Microchip Technology Inc	MCHP	-15.5	32.01	37.87	6097.3
Novellus Systems Inc.	NVLS	-12.2	31.58	35.97	2820.3
GameStop Corp.	GME	-11.2	23.83	26.85	3370.6
Citrix Systems Inc.	CTXS	-10.3	74.40	82.98	13986.8
Monster Worldwide Inc.	MWW	-10.3	13.14	14.65	1699.3
CB Richard Ellis Group Inc	CBG	-9.8	22.80	25.28	7409.7
Janus Capital Group Inc	JNS	-9.5	8.90	9.83	1657.2
Analog Devices Inc.	ADI	-9.4	35.89	39.62	10753.9
Autodesk Inc.	ADSK	-9.4	36.35	40.12	8395.2
Capital One Financial Corp.	COF	-9.2	48.75	53.71	22393.0
Source: Capital IQ

Filed under: Research Tagged: ADI, ADSK, COF, CTXS, GME, JNS, MCHP, MWW, NVLS

Despite Chip Warnings, Value Lurks in Chip Stocks Ahead of Earnings Season (ADI, AMAT, AMD, CRUS, INTC, SNDK, TXN, XLNX, MCHP, NVLS, SMH)

Administrator — Thu, 14 Jul 2011 12:16:04 +0000

Disappointing earnings and poor guidance from the likes of Microchip Technology Inc. (NASDAQ: MCHP) and Novellus Systems, Inc. (NASDAQ: NVLS) this week have cast a very dark shadow on semiconductor companies going into earnings season. Despite those two companies dragging down the segment as a whole, there are actually some cheap valuations ahead in the sector. We have laid out the numbers for shares of the following: Analog Devices Inc. (NYSE: ADI); Applied Materials Inc. (NASDAQ: AMAT); Advanced Micro Devices, Inc. (NYSE: AMD); Cirrus Logic Inc. (NASDAQ: CRUS); Intel Corporation (NASDAQ: INTC); SanDisk Corp. (NASDAQ: SNDK); Texas Instruments Inc. (NYSE: TXN); Xilinx Inc. (NASDAQ: XLNX).

This is a much different list from our true tech-value stocks for the rest of this year. We have identified how much these shares have dropped from their highs, but we have also looked at basic data concerning a forward P/E ratio for next year’s earnings and broken out the return on equity from Finviz. When you look at the consensus analyst price target, the companies look even cheaper in most cases. There is one caveat that has to be considered and that is that analysts will have to lower estimates through next week for the year ahead and that will of course change the valuations. We are not looking for any immediate gains solely based on value. The idea is to identify those situations where the drop has been enough and where the bad news may be close to priced in ahead of time.

Analog Devices Inc. (NYSE: ADI) recently closed at $36.56, down 15% from its 52-week high; about 10% of that loss has been in recent days. The company has a forward price to earnings multiple of 12 and a 27% return on equity (ROE). Analysts still have a consensus target north of $45.00 versus a 52-week high of $43.28.

Applied Materials Inc. (NASDAQ: AMAT) recently closed at $12.64, down 26% from its 52-week high. The company has a forward price to earnings multiple of 9.2 and a 20.5% return on equity (ROE). Analysts have a consensus target of about $15.75. As the big daddy of chip cap-ex, the Novellus news hit here as well. The forward estimates are almost always low for Applied, so there is no reason to jump the gun thinking that large earnings multiple expansion is heading this way. In fact, value is often a value trap here in Applied Materials and in many cap-ex stocks in the sector.

Advanced Micro Devices, Inc. (NYSE: AMD) recently closed at $6.34, down 32% from its 52-week high. The company has a forward price to earnings multiple of 8.4 and a 61% return on equity (ROE). The big problem with AMD remains relevance. This is the turnaround that just never seems to really turn around. The math has looked “cheap for a while” and the value trap argument seems to prevail.

Cirrus Logic Inc. (NASDAQ: CRUS) recently closed at $16.30, down well over 30% from its 52-week high and almost $10 shy of its $26.00 consensus analyst target. The company has a forward price to earnings multiple of 10 and a return on equity (ROE) of 62%. With a $1.1 billion market cap, our biggest concern is that it is in the class of companies which could have “big hits and bad misses” when it comes to living up to earnings expectations.

Intel Corporation (NASDAQ: INTC) recently closed at $22.48, down just over 5% from its 52-week high. The company has a forward price to earnings multiple of 9.4 and a return on equity of 27%. Intel has recently embarked on new initiative from tablets to security and to embedded systems. Unfortunately, Intel falls into the same “tech utility” category and its nature is now entirely different from in the past.

SanDisk Corp. (NASDAQ: SNDK) recently closed at $41.18, down 23% from its 52-week high. The company has a forward price to earnings multiple of 8.4 and a 25% return on equity. The reason SanDisk trades with a cheap multiple is because the company’s leadership in flash memory is subject to great swings throughout the business cycle. Another issue is that when SanDisk is in the middle of its 52-week range like this it offers a technical no-man’s land. This is one that may not be dirt cheap value nor a value trap.

Texas Instruments Inc. (NYSE: TXN) recently closed at $31.00, down over 15% from its 52-week high. The company has a forward price to earnings multiple of 11.2 and a 31% return on equity. With a large acquisition in the hopper, all we can do is consider the “value” on a standalone basis with serious caveats.

Xilinx Inc. (NASDAQ: XLNX) recently closed at $33.92 versus a 52-week high of $35.42, still well under 10% from highs. The company has a forward price to earnings multiple of 14 and a 28% return on equity. Unfortunately, this one just does not jump out in the screens other than its return on equity.

So, here are the comparable issues to consider. Microchip Technology Inc. (NASDAQ: MCHP) is now down about 20% from its 52-week highs, while Novellus Systems, Inc. (NASDAQ: NVLS) was down more than 20% from its 52-week highs. As you can see, some chip stocks named here are down a similar amount but others still have a way to go. It is very possible that “value” in semiconductors may still be more of a value trap until things normalize.

The ETF that rules in chipland is the Semiconductor HOLDRs (NYSE: SMH). With a price of $32.88, its 52-week trading range is $24.14 to $39.99. An 11% discount from the 52-week high may entice some buyers, but there is still room to argue that this highly unbalanced ETF may not be close enough to “cheap” as of yet as Intel and Texas Instruments both have more than 20% of the weighting here.

Earnings season is upon us.

Jon Ogg & Jim Berdou

Filed under: Semiconductor, Technology Companies, Value Investing Tagged: ADI, AMAT, AMD, CRUS, INTC, MCHP, NVLS, SMH, SNDK, TXN, XLNX