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BoA Likes Avago, Intel And Others Semiconductor Giants After Meeting Asian Investors

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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.

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

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.

Latest Ratings for AVGO

DateFirmActionFromTo
Mar 2021JP MorganMaintainsOverweight
Mar 2021RBC CapitalMaintainsOutperform
Mar 2021Wells FargoMaintainsEqual-Weight

View More Analyst Ratings for AVGO
View the Latest Analyst Ratings

 

Related Articles (AVGO + QRVO)

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Posted-In: BoA Merrily Lynch Vivek AryaAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas

Latest Ratings

StockFirmActionPT
NIUDaiwa CapitalInitiates Coverage On41.5
QMCONorthland Capital MarketsInitiates Coverage On12.0
IBKRJefferiesInitiates Coverage On89.0
MRETFTD SecuritiesDowngrades18.5
SWKSGoldman SachsDowngrades135.0
View the Latest Analytics Ratings
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