Credit Suisse Upbeat on 7 Semiconductor Equipment, Chip Stocks

GlobalFoundries Inc. (NASDAQ: GFS) has a 12-month price target of $80, along with an Outperform rating. Credit Suisse gives the stock positive marks for being positioned to take advantage of “strong cyclical tailwinds” and the company’s deep and wide moats, international manufacturing base, a “financial model which is just now inflecting and has significant margin expansion potential even as the overall Semi Cycle ‘normalizes.'” On the downside are weakness in the semiconductor cycle, the company’s expansion plans, shareholder concentration and pending litigation with IBM.

The stock’s 52-week range is $43.59 to $73.25. It traded Thursday morning at $55.99, down about 4.2% for the day. At that price, the upside potential to Credit Suisse’s price target is about 43%.

Intel Corp. (NASDAQ: INTC) has a price target of $70 and an Outperform rating. The analysts’ price target is based on Intel’s long-term EPS of “AT LEAST $5.50-$6.00 and a multiple of ~15x.” Those numbers are well above the consensus averages for the next three fiscal years. Downside risks are Intel’s “aggressive pricing, higher manufacturing spending, and loss of market share in key enterprise markets,” among other things.

The stock’s 52-week range is $43.63 to $68.49, and shares were trading at $46.23, down by about 2.5% on Thursday. At that price, the upside potential based on the $70 price target is more than 60%.

Micron Technology Inc. (NASDAQ: MU) has an Outperform rating and a price target of $130 from Credit Suisse. The analysts believe that the stock is “near trough levels,” and they see improvements in market fundamentals: pricing should begin to recover, more resilient margins in the memory chip space, and that Micron’s “strategic value continues to be under-appreciated.” Pricing pressure in the DRAM and NAND markets and execution risk in NAND manufacturing are among the risks to the price target. The rating is at risk from oversupply in the NAND market, execution risk in the DRAM market and more competition from new Chinese entrants into the market.

The stock’s 52-week range is $65.67 to $98.45, and the shares traded at $74.32, down 6.5% on the day. At that price, the upside potential based on the Credit Suisse price target is 75%.

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) has a price target of NT$800 (US$141.25) and an Outperform rating. On the upside, Credit Suisse notes, “We see its business outlook improving, and technology leadership should keep its market share and profitability intact.” On the downside, the risks include “fierce competition or demand reversion.” Note that TSMC trades American depositary receipts (ADRs) in the United States. Each ADR represents five shares of the company’s common stock.

The stock closed at NT$568 on Thursday in Taiwan, up less than 1% for the day. The 52-week range is NT$518 to NT$688, implying a potential upside of nearly 41%. In New York, the stock traded at $103.24, down 1.6%, in a 52-week range of $98.62 to $145.00.

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