Market Overview

Semiconductor Shareholders Beware: Goldman Sachs Is Bearish

Semiconductor Shareholders Beware: Goldman Sachs Is Bearish
Related ADI
5 Biggest Price Target Changes For Thursday
12 Stocks To Watch For February 28, 2018
AI Stock And Alibaba IoT Partner With 217% Growth Enters Buy Zone (Investor's Business Daily)
Related MXIM
Cyclical Fears For Semis Are Rising, Says Deutsche Bank
35 Biggest Movers From Yesterday

Although the analog semiconductor business model is stable, a guarded approach is recommended in view of “the muted top-line outlook, elevated margins and stretched multiples,” Goldman Sachs’ Toshiya Hari said in a report. The analyst initiated coverage of 4 Semiconductor stocks.

Analog Devices

Analyst Toshiya Hari initiated coverage of Analog Devices, Inc. (NASDAQ: ADI) with a Sell rating and a price target of $50, which implies 15 percent potential downside. He said there was limited upside to the company’s long-term margin targets.

Although Analog Devices is well positioned in data converters and has a high margin/return profile, the stock performance is likely to be impacted by the company’s high exposure to one socket at Apple Inc. (NASDAQ: AAPL), which constituted about 10 percent of total revenues, as well as the stretched multiples and downside to the CY17 Street estimates.

Maxim Integrated Products

Hari initiated coverage of Maxim Integrated Products Inc. (NASDAQ: MXIM) with a Neutral rating and a price target of $35, which implies 8.5 percent potential downside.

Maxim is among the few companies in the analog space with room for margin expansion through self-help measures, and its margins could improve over the coming years. The analyst said, however, that there were risks associated with the company’s outsized exposure to Samsung as well as its elevated valuation levels.

Linear Technology

Hari initiated coverage of Linear Technology Corporation (NASDAQ: LLTC) with a Neutral rating and a price target of $46, which implies 3.5 percent potential downside.

“While we are positive on LLTC’s favorable end market exposure and track record executing at coverage-best margin levels, the company’s current valuation premium fairly captures these positive aspects, in our view,” the Goldman Sachs report noted.

Texas Instruments

The analyst initiated coverage of Texas Instruments Incorporated (NASDAQ: TXN) with a Sell rating and a price target of $51, which implies 16.5 percent potential downside. He commented that although the company had executed well in recent quarters, its multiples were elevated and there was “limited headroom for additional margin optimization.”

Latest Ratings for ADI

Mar 2018B. RileyMaintainsBuyBuy
Mar 2018Deutsche BankMaintainsHoldHold
Mar 2018NomuraMaintainsNeutralNeutral

View More Analyst Ratings for ADI
View the Latest Analyst Ratings

Posted-In: Goldman Sachs Toshiya HariAnalyst Color Short Ideas Initiation Analyst Ratings Trading Ideas Best of Benzinga


Related Articles (AAPL + ADI)

View Comments and Join the Discussion!