Nomura Says Semiconductor Stocks Are "Underappreciated"

On Thursday, Nomura initiated coverage on some semiconductor equipment stocks. Analyst Romit Shah said “revenues are well below the 2010 peak, but Analog Devices, Linear and TI re-rated from 11x 2010 to 20x 2015E based on prospects for sustainable growth, as well as higher cash flow and capital returns.” Shah feels that semiconductor equipment stocks are “underappreciated, trading at 13x [Nomura's] 2015E EPS.” The analyst

is

and expects the company to “increase its dividend and share repurchase after closing the TE Connectivity merger.” In addition to Applied Materials, Shah initiated coverage on

and

. All three stocks are trading higher in Thursday's trading.