Chips: UBS Turns Bullish; Upgrades Slew Of Stocks

The chip analysts at UBS turned bullish this morning, raising their ratings on a slew of stocks on the theory that the industry’s historically low utilization rates have likely troughed. UBS thinks year-over-year sales declines will likely hit bottom in the June quarter; the firm notes that “under-shipment of end consumption” should clear excess inventory over the next 1-2 quarters. While UBS sees industry revenues down 35% this year, they expect a rebound of 10% in 2010.

• U.S. chip analyst Uche Orji upgraded Texas Instruments (TXN) to Buy from Neutral, upping his price target to $20, from $15, and asserting that a sum-of-the-parts analysis points to “significant upside.”


• Orji also upgrades Intersil (ISIL) to Neutral from Sell, increasing his target to $10, from $6.75. He writes that “downside risk to fundamentals has subsided with bottoming utilization, stabilizing order trends and potential depletion of channel inventory in one to two quarter timeframe.”


• Semiconductor equipment analyst Stephen Chin upgrades MEMC Electronic Materials (WFR) to Buy from Neutral, increasing his price target to $20, from $12.50. He writes that recent checks found that a planned shutdown of its plant in Taisil, Taiwan, will be shorter than expected. He upped his Q1 EPS estimate or 9 cents, from 4 cents.


• Chin also upgraded ATMI (ATMI) to Buy from Neutral, boosting his target to $20, from $13. He says the company’s March wafer starts could increase over February given more copper-related materials sales to its largest foundry customer, Taiwan Semiconductor (TSM). For 2009, he now sees a loss of 92 cents a share, versus a previous estimated loss of $1.04. For 2010, he sees profits of 80 cents, up from 40 cents.


• European chip analyst Nicholas Gaudois upped his rating on CSR (CSR.L) to Buy from Neutral, upping his target to 260 pence from 200. He sees the potential for material upside from the company’s proposed acquisition of SiRF (SIRF).


• Gaudois also upped his rating on STMicroelectronics (STM) to Neutral from Sell, boosting his target to 4.40 Euros from 3.70. He says company specific risks remains, but that the downside appears limited with the stock trading at 0.8x enterprise value/trough-of-cycle ‘09 revenues.


• Asian chip analyst Jonah Cheng upped his ratings on United Microelectronics (UMC), Advanced Semiconductor, also known as ASE (2311.TW) and Siliconware Precision (SPIL) to Buy from Neutral.

In today’s trading:

• Texas Instruments is up 74 cents, or 4.5%, to $17.13.


• Intersil is up 39 cents, or 3.6%, to $11.26.


• MEMC is up $1.46, or 9.8%, to $16.30.


• ATMI is up $1.41, or 10%, to $15.43


• CSR is up 9.50, or 4.5%, to 220 in London trading.


• STM is up 25 cents, or 4.6%, to $5.69.


• UMC is up 13 cents, or 6.7%, to $2.08.


• ASE is up 30 cents, or 2.5% to 12.50 in Taiwan trading.


• Siliconware is off 2 cents, or 0.4%, to $4.81.