From Standard & Poor's Equity ResearchJEFFERIES DOWNGRADES INTEL, OTHER CHIP STOCKS
Jefferies analysts Adam Benjamin and Blayne Curtis downgrade Texas Instruments (TXN), Advanced Micro Devices (AMD), Cypress Semiconductor (CY), Intersil (ISIL), National Semiconductor (NSM), and Silicon Image (SIMG) to underperform from hold; Intel (INTC) to underperform from buy; Atheros Communications (ATHR), Conexant Systems (CNXT), Intellon (ITLN) and Mellanox Technologies (MLNX) to hold from buy.
The analysts believe investors should begin building positions in semi group in mid-February. They note, unlike prior downturns, we entered this one with relatively lean inventories in most end markets. But the fourth quarter has gotten worse for everyone--significantly below guidance; first quarter visibility is awful and is likely not to improve before EPS calls given holiday shutdowns.
JP MORGAN CUTS JOY GLOBAL, BUCYRUS TO UNDERWEIGHT FROM NEUTRAL
On Dec. 17, Joy Global (JOYG) posted $0.11 fourth quarter EPS. JPMorgan analyst Ann Duignan says JOYG's fiscal year 2009 (October) outlook disappointing. She notes JOYG received two shovel cancelations in the past quarter in an industry that doesn't normally have any.
Duignan believes this is the beginning of a cyclical decline that is likely to be deeper and longer than expected. She views mining as a classic late cycle, lagging on the way up and down; she expects industry EPS cuts to continue in 2010 and beyond.
She says cancelations and postponements of mining projects are accelerating. She sets a $25 price target for JOYG and $23 for Bucyrus (BUCY).