What’s Evercore’s Semiconductor Outlook?

Adam Rogers - Author

Oct. 10 2019, Updated 9:20 p.m. ET

Evercore ISI downgrades ADI, WDC, and Seagate

In the previous part of this series, we looked at how Goldman Sachs’s (GS) concerns weighed on stocks last week. In early September 2018, investment firm Evercore ISI downgraded several semiconductor stocks. Evercore is one of the top research firms covering semiconductor stocks.

Evercore ISI downgraded Western Digital (WDC) and Analog Devices (ADI) from “outperform” to “in line,” while Seagate (STX) was downgraded from “in line” to “underperform.”

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Evercore believes stocks with exposure to NAND memory chips and analog processors could be negatively impacted over the next 12 months. Analog’s price target was revised to $110 from $105, while Seagate’s target was reduced to $45 from $55, and Western Digital’s 12-month price target was reduced to $75 from $100. The company, however, upgraded KLA-Tencor (KLAC) from “in line” to “outperform.”

Raised price targets for NVIDIA

However, Evercore is bullish about NVIDIA (NVDA) and Maxim Integrated Products. NVIDIA has been outperforming markets for the last two years and has gained 43% in 2018. Analyst C.J. Muse confirmed that while he remains bullish about memory chip stocks, there are headwinds that will likely impact revenue at the end of this year.

In a client report, Muse said Analog Devices (ADI) and Texas Instruments could face short-term headwinds driven by decelerating enterprise chip sales as well as ongoing trade wars.

Evercore expected semiconductor stocks to drive the markets after Labor Day. Muse also identified seven stocks including Micron (MU), Marvell Tech (MRVL), Universal Display (OLED), KLA-Tencor, Xilinx, NVIDIA, and ASML as a group of stocks to watch out for and termed them the “Magnificent 7.”


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