Publish date:

Microchip Tech, NXPI Drop; Mizuho Urges Caution on Chip Sector

Investors must be more defensive when it comes to semiconductor stocks, Mizuho says, downgrading Microchip Technology and NXP.

Shares of Microchip Technology  (MCHP) - Get Report and NXP Semiconductors  (NXPI) - Get Report were lower after Mizuho Securities analysts urged investors to be defensive when assessing the chip sector. 

NXP, Eindhoven, Netherlands, and Microchip Tech, Chandler, Ariz., were downgraded to neutral from buy.

Mizuho also cut its price targets, on Microchip Technology to $160 from $165 and NXPI to $220 from $225. 

Analyst Vijay Rakesh says investors must "be more defensive and selective" with semiconductor companies amid the global chip shortage stemming from supply-chain issues. 

Year-over-year comparisons for chipmakers that focus on automotive and industrial products "start to get tougher with growth slowing in China, and the insatiable order growth starting to stabilize," Rakesh said. 

Shares of Microchip Tech at last check were off 2.9% at $139.46 while NXPI dropped 3.4% to $196.61.

TheStreet Recommends

In other moves, Mizuho raised Nvidia's  (NVDA) - Get Report price target to $900 from $710 while affirming a buy rating. 

The investment firm lifted its price target on Synaptics  (SYNA) - Get Report to $175 from $145 and affirmed a buy rating.

Seagate Technology's  (STX) - Get Report price target was raised to $95 from $88 with a neutral rating.

Taiwan Semiconductor  (TSM) - Get Report on Thursday said it expected sales to rise more than 20% in 2021, affirming its crucial role in helping alleviate a global chip shortage that’s slammed production of everything from cars and trucks to dishwashers and toys.

Taiwan Semi Chief Executive C.C. Wei said the company expected semiconductor supply to remain tight into 2022, though it will ramp up production of microcontrollers by close to 60%.

Nvidia is a holding in Jim Cramer's Action Alerts PLUS investing club. Want to be alerted before Jim Cramer buys or sells NVDA? Learn more now.