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BoA Merrily Lynch’s Vivek Arya reiterated a Buy rating for Broadcom Ltd (NASDAQ: AVGO), Skyworks Solutions Inc (NASDAQ: SWKS) , Qorvo Inc (NASDAQ: QRVO), NVIDIA Corporation (NASDAQ: NVDA) and Intel Corporation (NASDAQ: INTC).
Analyst Vivek Arya maintained his bullish view on Radio Frequency (RF) chipmakers after attending BAML’s Asia Pacific TMT conference and meeting investors in Hong Kong and Singapore.
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Smartphone Trends Stabilizing
Arya mentioned that stabilizing trends were witnessed in both iPhone and China Phone, with the Q3-Q1 inventory destocking cycle largely over. He expects iPhone builds to have bottomed around 40 million units in 1Q, with sequential growth expected in 2Q after including the tart of iPhone 7 builds.
“Samsung Galaxy S7 also appears to be off to a good start with 40mn units expected in 2016, aided by the promotional bundling of Gear VR glasses (also benefits MXIM). Overall we see signs of stability and improving seasonal/content trends boosting RF chipmakers AVGO, SWKS and QRVO,” the analyst wrote.
Broadcom
The price objective for Broadcom is at $200, reflecting the company’s leadership in mobile, data center and broadband markets, cyclical rebound in Industrial and Comms Infrastructure demand, Cash return and deleveraging offset by Integration and financial risks with the acquisition of Broadcom Corporation (NASDAQ: BRCM) and customer concentration risks.
Skyworks Solutions
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At $85, the price objective is justified by the company’s 10 percent sales growth target for 2017-2018 and an EBIT growth trajectory that is faster than sales growth during 2015-2017. Skyworks Solutions’ early leadership in large and growing $10 billion TAM in IoT and unlevered balance sheet with more than $1 billion in cash remain its strengths, the analyst noted.
Qorvo
The price objective is at $56 and reflects the company’s relatively fast growth opportunity, offset in part by its inconsistent execution, Arya said.
Strong VR Buzz And Scope For Nvidia
Virtual Reality has emerged as a potentially large growth driver, with applications beyond gaming and into education, medicine, travel, entertainment and architecture. Nvidia Corporation’s growth potential in VR, auto, data center and gaming markets makes the company an attractive option.
“NVDA benefits from VR in not just PCs but also from selling GPUs in workstations used for creating VR content. Main pushback was on NVDA's ability to maintain its edge in automotive processors given increasing competition from traditional (NXPI, TXN, QCOM) vendors and disruptive entrants (Mobileye),” the BoA Merrily Lynch report noted.
ARM Server Threat Distant: INTC
Meetings with traditional server vendors revealed that although they were looking at ARM-based offerings as an alternative to Intel’s x86 servers, any meaningful ramp of ARM offerings will take time.
Arya expects Intel to more than offset any modest compute share loss to be more than made up by share gains in the $18 billion networking and communications market.
The price objective for Intel is at $36, which is justified by Intel’s declining exposure to mature PCs and growing exposure to profitable cloud computing, 3D memory, IoT and software segments, Arya added.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.