Jefferies downgrades Intel, AMD, 7 others
Dec 18 (Reuters) - Jefferies & Co downgraded nine semiconductor companies including Intel Corp (INTC.O) and smaller rival Advanced Micro Devices Inc (AMD.N), and said investors should begin building positions in the semiconductor group in mid-February.
The brokerage downgraded Intel to "underperform" from "buy," and said investors should sell the shares as the company is expected to suffer given the PC market slowdown due to desktop declines and slowing laptop growth.
"Don't get fooled by this near-term rally. Start buying in mid-February--the first leg of the cyclical upturn will rise all tides," Jefferies analyst Adam Benjamin said in a note to clients.
In the second leg of the upturn, stock performance will be dictated by underlying fundamentals, Benjamin said.
Investors should be careful about just calling 2009 a "throwaway year" and looking at 2010 as the 2009 base will matter for 2010 valuations, he said.
"Unlike prior downturns, we entered with relatively lean inventories in most end markets," he said, adding that fourth quarter has gotten worse for everyone--significantly below prior estimates.
Visibility for the first quarter is "awful" and not likely to improve before earnings calls given the holiday shutdowns.
Jefferies downgraded AMD to "underperform" from "hold" and said he sees a severely impaired balance sheet for the company, which was significantly unprofitable and poorly positioned in the maturing PC market. Benjamin upgraded Xilinx Inc (XLNX.O) to "buy" from "underperform," saying the company has a well-diversified business with an attractive valuation versus peers and can outperform as it gains share in the PLD market.
In the second leg of the upturn, the analyst recommended to own shares of Broadcom Corp (BRCM.O), NetLogic Microsystems Inc (NETL.O), Qualcomm Inc (QCOM.O), Silicon Laboratories Inc (SLAB.O), and Xilinx.
He said investors should not own in the second leg AMD, Cypress Semiconductor CY.N, Intersil Corp (ISIL.O), National Semiconductor Corp NSM.N, Silicon Image Inc (SIMG.O), Texas Instruments Inc TXN.N, and Zoran Corp ZRAN.O.
For the list of rating and the price target changes, double click on [nWNAB4157] .
(Reporting by Mary Meyase in Bangalore; Editing by Gopakumar Warrier)
((mary.meyase@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: mary.meyase.reuters.com@reuters.net)) Keywords: INTEL/RESEARCH JEFFERIES
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