J.P. Morgan H&Q
analyst resumed coverage of several semiconductor companies this morning, giving each a long-term buy rating.
Despite, or perhaps because of, the recent earnings and revenue shortfalls within the chip sector, analyst Eric Chen recommended accumulating shares of
within the communications chip area and
Advanced Micro Devices
within the PC chip group.
"Our general view for the semiconductor sector is on the positive side, as we believe that the global semiconductor industry will likely reach a bottom in September," Chen wrote in a research note. "As such, we are recommending investors accumulate shares in semiconductor leaders in front of the anticipated up-tick in business fundamentals."
The stocks were getting a boost in midmorning trading. Intel was up 2% to $30.23, AMD surged 7.6% to $29.50, Xilinx rose 1.5% to $41.77 and Altera added 3.3% to $28.91.
Regarding Xilinx and Altera, Chen wrote that "the near-term concern is the weak demand and the attendant inventory overhang in the communications industry, as both companies have sizable exposure to the communications infrastructure sector." But longer-term, he's a firm believer in the programmable logic device market, of which the two companies are a part.
As for AMD, Chen wrote that the company will continue to enjoy market share strength because of the trend toward value PCs. "Looking out six to 12 months, we believe that Intel has a fairly good chance of catching up in market share momentum," the analyst wrote.
Philadelphia Stock Exchange Semiconductor Index
is up 7.1% year-to-date, having climbed 5.8% in the past week and 3.2% since the start of June.