The chip sector is getting a lift Tuesday morning from Bank of America/Merrill Lynch analyst Sumit Dhanda, who raised his ratings on Intel (INTC), LSI (LSI), Marvell (MRVL), Maxim Integrated Circuits (MXIM) and National Semiconductor (NSM).
Dhanda says his industry model now suggests 21% growth in chip demand in 2010, above his previous 14% forecast, and more than double the Street consensus for roughly 9% growth. He sees revenues driven by improving end demand and still-lean supply chain inventories. Dhanda figures that if he is right, Street estimates are going to ratchet higher for many chip companies.
Here are the details on his upgrades:
- Intel: To Buy from Neutral; price target $19.
- LSI: To Buy from Underperform; price target $7.
- Marvell: To Buy from Neutral; price target $17.
- Maxim: To Buy from Neutral; price target $15.
- National Semi: To Neutral from Underperform; price target $13.
“Recent macro data,” he writes, suggests “a definitive turn in end demand, thus warranting a more constructive stance.” He notes that his firm’s economics team has taken a more constructive stance on GDP growth, and he says there has been a “definitive inflection” in the 3-month moving average for the electronics component of U.S. durable goods shipments, “historically a reliable indicator of electronic demand and an early predictor of a fundamental turn in 2003.”
Well, let’s hope he’s right.
In Tuesday’s trading:
- INTC is up 27 cents, or 1.6%, to $16.81.
- LSI is up 21 cents, or 4.6%, to $4.76.
- MRVL is up 46 cents, or 4%, to $11.86.
- MXIM is up 11 cents, or 0.7%, to $15.82.
- NSM is up 15 cents, or 1.2%, to $12.42.