Ahead Of The Bell: Semiconductor Stocks

NEW YORK (AP) — Semiconductor companies are seeing orders pick up in August, pointing to a strong third quarter for a hard-hit industry, a Robert W. Baird analyst said Thursday.

"Distributors are starting to replenish inventories," Baird analyst Tristan Gerra told investors in a note.

The improvement follows drastic inventory cutbacks in the beginning of the year, driven by falling demand for the electronics and other consumer items that use semiconductors.

Gerra raised his rating on Norwood, Mass-based Analog Devices Inc. and Dallas-based Diodes Inc. to "Outperform" from "Neutral." He raised Texas Instruments Inc., also based in Dallas, to "Neutral" from "Underperform."

Analog shares jumped 56 cents, or 2.1 percent, to $27.76 in premarket trading, while Texas Instruments was up 18 cents, or 1 percent, to $24.06.

"Our recent industry checks point to continued strong trends for semiconductor shipments," Gerra said, pointing out strength in Europe, which he said was the weakest region during the second quarter.

Gerra said his positive take on semiconductor trends covers 2009, but he remains cautious about next year's outlook.