Chips: Citi Launches On 11 Analog Stocks; Betting On Beta

Citigroup analyst Terence Whalen today launched coverage on 11 analog semiconductor stocks - and he’s bullish on most of them. Whalen writes that the stocks “fit squarely in the sweet spot of the analog cycle’s time-return vectors.” In other words, he writes, risk-reward on the stock looks good with EPS estimates being revised upward and sales growing. He notes that the stocks are up 16% over the last four weeks, and 29% since the November bottom on the SOX, but contends they could rally another 25% over the next six months.

Whalen notes that over the last four weeks, low-margin chips stocks like Fairchild (FCS) and ON Semi (ONNN) have outperformed high-margin players like Analog Devices (ADI) and Linear Tech (LLTC), “marking early rotation to high beta offense from low beta defense. He contends low margin out-performance should widen over the next six months.

Here’s a list of the stocks Whalen launched coverage on today:

• Fairchild: Buy.


• International Rectifier (IRF): Buy.


• ON Semi: Buy.


• Analog Devices: Buy.


• Silicon Labs (SLAB): Buy.


• Semtech (SMTC): Buy.


• Microchip (MCHP): Buy.


• Maxim (MXIM): Buy.


• Linear: Hold.


• National Semi (NSM): Hold.


• Intersil (ISIL): Sell.