Technology

Top Wall Street Analyst Still Very Bullish on These 4 Semiconductor Stocks

In addition, Marvell has the ability to monetize Arm server internet protocol and drive potential synergies from the company’s Inphi acquisition, which has been approved by Chinese regulators and should close in the second or third quarter.

Shareholders receive a 0.47% dividend. Jefferies has a $55 price target, while the consensus target is $56. Marvell Technology stock rose over 5% on Tuesday to close at $50.73.

Microchip Technology

This company is a huge Internet of Things benefactor and the stock has been very strong recently. Microchip Technology Inc. (NASDAQ: MCHP) is a leading provider of microcontroller, mixed-signal, analog and flash-IP solutions, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide.

The company acquired Microsemi in June of 2018, and most analysts believe that purchase and earlier acquisitions afford Microchip Technology ongoing mergers and acquisitions linked upside potential from cross-selling (to boost sales) and manufacturing synergies (to reduce costs).

Microchip’s sales, margins and earnings per share are somewhat more levered to the cyclical stabilization and recovery that is now upon us than many peers, owing to its relatively more vertically integrated manufacturing network, significant channel inventory reduction over the past seven quarters and elevated financial leverage.

The dividend yield is 1.08%. The $194 Jefferies price target is higher than the $176.43 consensus target. Microchip Technology stock closed at $152.61 on Tuesday.

Nvidia

This top chip company has reported strong earnings the past few years, and the stock was absolutely hammered last quarter but had rallied back smartly. Nvidia Corp. (NASDAQ: NVDA) is one of the leaders when it comes to supplying graphics processing technology for the 3D graphics market, including desktop graphics processors and gaming consoles.

Nvidia is also moving into visual computing chips for cars, mobile devices and supercomputers. The company has been able to use its ability to leverage past investments, with a more controlled spending structure ahead on unified, which enables strong cash flow that is allowing a focus on capital return, which is currently estimated to be $1 billion next year.

The analyst feels that the company deserves a higher multiple, as Nvidia is on a roadmap to grow its per-share earnings by an impressive compounded annual growth rate of around 37% over the next five years. This is as it builds its ecosystem, starting with chips, switch fabrics, software and artificial intelligence computing systems. The analyst cites downside risks that include demand destruction due to a prolonged outbreak of COVID-19 virus, slower PC gaming growth and competition from competitors and new entrants to the deep learning market.

Investors receive just a 0.09% dividend. Jefferies has set a $740 price target. The consensus target is just $715.34. Nvidia stock closed at $698.28 a share.


Of course, the increased demand and diminished product availability will be great for some chip companies, but it could put some intense pressure on the companies needing the semiconductors. Some have even indicated there could be factory closings as a result. Buying any of these four solid stocks could very well be a great short-term and long-term strategy for aggressive growth investors.