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Morgan Stanley: 'Surprise Uptick' In Short Interest Seen In Semiconductor Stocks

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Joseph Moore of Morgan Stanley issued an industry-wide update on semiconductor stocks and commented on Analog Devices, Inc. (NASDAQ: ADI), Marvell Technology Group Ltd. (NASDAQ: MRVL) and Intel Corporation (NASDAQ: INTC).

Moore notes that “surprisingly,” short interest in the semiconductor group increased following Microchip Technology Inc.'s (NASDAQ: MCHP) earnings report on October 30. The analyst adds that shares of the group rose 4 percent the next day in what he believes to be a short covering rally.

Short interest as of October 31 increased by 7 percent on average over the two-week period and 21 percent over the past month, based on Moore's calculation.

Intel: No Big Surprises At Analyst Day, Capital Spending Unknown

Moore isn't expecting any surprises to come out of Intel's analyst day presentation on Thursday. The analyst notes that Intel's 2015 capital spending is the “biggest unknown” which is now estimated to be down slightly to $10 billion.

Moore notes that another “unknown” is the way that Intel plans on articulating its mobile and wireless losses which are expected to remain high.

Moore isn't expecting Intel's management to issue any changes to Intel's fourth quarter guidance while the consensus estimates for 2015 is unlikely to change either.

“We are cautious on the stock, and think bulls may be too optimistic in terms of potential for capital spending declines, and on the pace of reducing losses in Mobile and Wireless,” Moore notes.

Analog Devices: Earnings Report A ‘Test'

Moore notes that he previously lowered his estimates on Analog Devices on October 13. The analyst adds that he is “surprised” that Street estimates have not really moved over the last month.

Moore is lowering his fourth quarter earnings per share estimate to $0.67 on revenues of $795 million, which is lower than the consensus estimate of $0.68 and $802 million, respectively.

Analog Devices will report its fourth quarter results on November 25 after market close.

Marvell Technologies: ‘Interesting Value'

Moore thinks that shares of Marvell Technologies represents “interesting value” but the analyst expects “significant” headwinds in baseband and pressure in SSD market share as a result of increased competition from Taiwan-based firms.

“We don't think there is urgency to buy the stock, and remain Equal Weight, though we think the stock offers longer term upside based on low valuation and weak sentiment,” Moore wrote.

Latest Ratings for ADI

DateFirmActionFromTo
Sep 2019UpgradesEqual-WeightOverweight
Aug 2019MaintainsEqual-Weight
Jun 2019UpgradesSellBuy

View More Analyst Ratings for ADI
View the Latest Analyst Ratings

Posted-In: Joseph Moore Microchip Technology Morgan StanleyAnalyst Color Analyst Ratings

 

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