The chip sector is getting a lift Tuesday morning from Bank of America/Merrill Lynch analyst Sumit Dhanda, who raised his ratings on Intel (NASDAQ:INTC), LSI (NASDAQ:LSI-OLD), Marvell (NASDAQ:MRVL), Maxim Integrated Circuits (NASDAQ: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.