Broadcom Inc AVGO:NASDAQ

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Most Semiconductor-Focused Companies Seen Meeting, Exceeding H1 Results Despite Headwinds, BofA Says

12:40PM ET 4/14/2022 MT Newswires
Most semiconductor-focused companies are expected to either meet or surpass Q1 and Q2 financial estimates as product mix and pricing benefits amid tight supplies offset weak demand, with the headwinds expected to extend beyond 2022, BofA Securities said.

"Ironically, strong guides could be viewed skeptically by investors as just a delay in the inevitable macro-induced reset," a team of BofA analysts, including Vivek Arya, said in a note emailed Thursday.

"Investor skepticism and market turmoil could keep chip stocks under pressure but also present enhanced buy opportunities," they added.

For the broader semiconductor sector, the firm maintained its 2022 sales growth outlook at 13% year-over-year to $630 billion, with solid memory up 25% and non-memory sales growth projected lower by 100 basis points to 9%.

BofA also lowered its 2023 industry sales to 7.3% from 8%, including memory up 13% and non-memory up 4.8%, compared with its previous estimate for a 6% gain, citing supply chain concerns, consumer headwinds and fresh COVID-triggered lockdowns in China.

The firm said it is reiterating all its ratings on its covered semiconductor stocks, and its top picks include Nvidia (NVDA), Marvell Technology (MRVL), Broadcom (AVGO), Advanced Micro Devices (AMD), ON Semiconductor (ON), Analog Devices (ADI), NXP Semiconductors (NXPI), Texas Instruments (TXN), KLA (KLAC), GlobalFoundries (GFS), Applied Materials (AMAT), Lam Research (LRCX) and Nova (NVMI).

BofA also cuts its price objectives for various stocks, including Ambarella (AMBA), Advanced Micro Devices, Camtek (CAMT), Credo Technology Group (CRDO), Cirrus Logic (CRUS), GlobalFoundries, II-VI (IIVI), Marvell Technology, Macom Technology Solutions (MTSI), Micron Technology (MU), Nvidia, Navitas Semiconductor (NVTS), NXP, ON Semiconductor, Qorvo (QRVO) and Skyworks Solutions (SWKS).

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