24/7 Wall St.

Typically, many Wall Street analysts are the kings and queens of after-the-fact calls. Often, but not always, they continue to pound the table on a company even when the fundamentals are weakening. Then when they miss numbers, lower guidance or both, they will often cut the rating and lower the price target.

Over the years, we here at 24/7 Wall St. have pointed out analysts that have gone that route, so it’s only fair to point out when they make an outstanding call. Nvidia Inc. (NASDAQ: NVDA) was blitzed on Monday when the company came out and lowered guidance, citing among other things deterioration in the economy in China. The company reports earnings on February 14 and now expects quarterly revenue of $2.20 billion, down from previously stated guidance of $2.70 billion.

Jefferies semiconductor analyst Mark Lipacis, was bullish early on the stock as it exploded higher for years, and he made a big call last week, before the hemorrhaging, by removing the company from the firm’s Franchise List picks of top stocks to Buy. While he maintains a Buy rating on the shares, with a $246 price target, he saw the proverbial writing on the wall and noted this in the January 25th research report:

We maintain a Buy rating on NVIDIA, but remove it from Jefferies Franchise Picks as we expect cloud players to digest Data Center capacity over the next several quarters. We continue to view the company as a key beneficiary of secular computing trends outlined in our “4th Tectonic Shift” investment thesis. Over the next 5 years, we think the aggregate data center processor market will expand to $50 billion and the parallel processing part of that market will approach $20 billion, and we expect the company to capture a large part of that parallel processing market.

This is how a good analyst operates. He maintains the long-term positive conviction in the stock while noting short-term potential bumps and issues in the story.

We screened the Jefferies semiconductor research for stocks rated Buy and found four that look like solid plays for aggressive accounts with a longer time horizon.

AMD

After years of frustrating performance, this top company appeared to have turned the corner, but it was absolutely destroyed in October and November. Advanced Micro Devices Inc. (NYSE: AMD) is one of the largest suppliers of PC microprocessors and graphics processors worldwide to computing original equipment manufacturers. The company’s main product lines include desktop, notebook and graphics processors, and embedded/semi-custom chips.

Last year the company released its first major offering in five years, the Ryzen chipset, which many feel is uniquely positioned to compete with the big players like Intel and Nvidia in the $50 billion total addressable market for personal computers, gaming, artificial intelligence and servers.

While third-quarter earnings were somewhat disappointing, new catalysts could drive the shares, with AMD having a generational share gain opportunity. EPYC 2/Rome can leverage the software and qualification work started with EPYC 1, and most expect Rome to ramp in the second half of 2019. The new Vega GPU will be industry’s first at nanometers, and AMD is already annualizing more than $100 million in data center GPU sales, addressing a $10 billion potential opportunity.

The Jefferies price target for the shares is $30, which compares with a much lower Wall Street consensus target of $23.70. The shares closed Monday’s trading at $20.18, down almost 8% on the day.

Analog Devices

This stock could very well continue to benefit from an increase in information technology and upcoming 5G spending. Analog Devices Inc. (NASDAQ: ADI) is a leader in the design, manufacture and marketing of analog, mixed-signal and digital signal processing integrated circuits for use in industrial, automotive, consumer and communication markets worldwide. It offers signal processing products that convert, condition and process real-world phenomena, such as temperature, pressure, sound, light, speed and motion, into electrical signals.

Last year the company introduced a highly integrated polyphase analog front end with power quality analysis designed to help extend the health and life of industrial equipment while saving developers significant time and cost over custom solutions. Achieving extremely accurate, high-performance power quality monitoring typically requires customized development, which can be expensive and time-consuming.

Analog Devices investors receive a 1.97% dividend. Jefferies has a $116 price target, but the consensus target is lower at $100.25. The stock closed Monday at $97.34, down less than half of 1% on the day.

NXP Semiconductors

This is still considered a top play for investors looking for a chip stock with Internet of Things exposure, and it is a solid value idea at Jefferies. The NXP Semiconductors N.V. (NASDAQ: NXPI) merger with Freescale Semiconductor made it the fourth largest semiconductor company in the industry. It is also important to note that the combined company is the number one supplier in auto semiconductors with a 14% share, number one supplier in global microcontrollers and a dominant supplier in mobile payments.

NXP continues getting its chips into high-growth areas such as contactless mobile payments, the Internet of Things, mobile-phone charging, increased cellular data consumption and LED lighting. Trading at a solid discount to peers, analysts are very positive on the faster earnings growth potential relative to its competition.

The massive $128 Jefferies price target is well above the $99.75 consensus target. The stock closed Monday at $85.66, actually up on the day.

Texas Instruments

This old-school chip tech company offers solid value at current levels. Texas Instruments Inc. (NASDAQ: TXN) is a broad-based supplier of semiconductor components, ranging from digital signal processors to high-performance analog components, to digital light-processing technology and calculators.

Some 65% of the company’s sales are exposed to the well-diversified, business-to-business industrial, automotive, communications infrastructure and enterprise markets. While the stock was hit hard recently as it is a big Apple supplier, the long-term outlook for this venerable leader makes it a safer bet for accounts with less risk tolerance.

Last week, the company reported earnings per share for the latest quarter that topped the consensus estimate, but its revenue of $3.72 billion for the period fell a bit short of what analysts were looking for.

Shareholders receive a 2.96% dividend. Jefferies is comfortable with a $137 price target. The posted consensus target is $110.57, and shares closed most recently at $102.68, down less than 2%.

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All four of these stocks were eviscerated in the October and November selling, but for aggressive accounts able to look past the rubble, there could be tremendous short-term and longer-term opportunities. Again, these companies are only suitable trades for those with high risk tolerance.