Following a strong 2014 rally fueled by healthy industry growth and hopes for more consolidation, Goldman has lowered its rating for the semi industry to Cautious from Neutral.
The firm thinks industry shipment growth will slow down, and sees risk to Q4 estimates. InvenSense (NYSE:INVN) has been cut to Neutral, NXP (NASDAQ:NXPI) to Sell, and Maxim (NASDAQ:MXIM) to Buy from Conviction Buy.
Benchmark aired cautious remarks about the sector last month, noting supply chain inventories have been rising and Taiwanese electronics growth (seen as a proxy for chip demand) has been slowing down.
Regarding InvenSense, analyst Mark Delaney notes shares have hit Goldman's $25 target and have soundly outperformed the S&P 500 since being added to Goldman's Americas Buy list near the end of 2011. He adds a key near-term catalyst (share gains at Apple) has played out.