BofA: Three Semiconductor Picks In A Choppy Market
Semiconductor stocks are not a good place for investors to "hide," regardless of the company's size or balance sheet, according to Bank of America Merrill Lynch. Nevertheless, the volatility seen across the entire market provides investors with a good opportunity to pick up three stocks in the sector.
BofA's Vivek Arya commented on three semi stocks in light of the turbulent market:
- NVIDIA Corporation (NASDAQ:NVDA)
- Skyworks Solutions Inc (NASDAQ:SWKS)
- Marvell Technology Group Ltd. (NASDAQ:MRVL)
- The Street sees Nvidia as "another chip company," but it is a "platform company."
- Nvidia boasts a highly unique and leveragable architecture for some of the fastest-growing markets, including artificial intelligence and autonomous driving.
- Recent execution has been "off the charts" and backed by a "solid" balance sheet.
- Skyworks should see content gains in low-band diversity amplifiers and filters.
- Greater insourcing and use of leading filters should boost gross margins.
- The company is one of the most "overlooked" companies in the Internet of Things space.
- Valuation is attractive at 13x forward PE.
- Marvell is led by a strong operational management team that can manage the product pipeline from its yet-to-be-finalized 2017 acquisition of Cavium.
- Investors may be underappreciating its 65-percent exposure to sticky markets like enterprise and networking.
- The company is likely to benefit from the upcoming 5G era.
- Shares of Nvidia closed Friday at $232.08, up 6.69 percent. BofA has a $300 price objective for the stock.
- Shares of Skyworks closed Friday at $102.64, up 3.63 percent. BofA has a $120 price objective for the stock.
- Shares of Marvell Technology closed Friday at $21.30, up 2.7 percent. BofA has a $28 price objective for the stock.
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