Citi Launches Positive Catalyst Watch On NXP, ON; Negative On Intel

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  • Citi analyst Christopher Danely spent the last few weeks meeting with clients across the country and wanted to express his thoughts on sentiment and stocks. 
  • He remained negative on semis but believed a short-term rally could continue through August, given near-term downside is understood. Investors were universally bearish on semis, but a large-scale collapse was not imminent. 
  • He launched cheerful catalyst watches on NXP Semiconductors NV NXPI and ON Semiconductor Corp ON in anticipation of good earnings and a short-term bounce in the group and a negative catalyst watch on Intel Corp INTC due to downside to estimates for earnings. 
  • Previously, Citi reiterated Neutral on Intel Corp INTC and Advanced Micro Devices, Inc AMDbetting on a contraction in the PC market to impact both negatively. 
  • May marked the fifth consecutive month where notebook shipments were below expectations. 
  • It cut the 2Q22E notebook shipments from down 3% Q/Q to down 11% Q/Q, well below seasonality of up 5%-10% Q/Q. 
  • Intel reportedly looks to hike its processor prices after Taiwan Semiconductor Manufacturing Company Ltd TSM. It could force PC vendors to opt for advance purchases.
  • Rising production costs put pressure on chipmakers amid demand slowdown for smartphones and personal computers on market uncertainties fueled by inflation, the Ukraine crisis, and COVID-related lockdowns in China.
  • Photo by jonas-svidras via Unsplash
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