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KeyBanc Sees Semiconductors' Recessionary Fears Largely Priced In; Gives Out Top 5 Picks

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·1 min read
In this article:
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  • KeyBanc analyst John Vinh's quarterly semiconductor cycle analysis highlighted certain aspects.

  • Firstly, he saw the current correction in the SOX essentially already appears to reflect risks associated with a recession, with the current 52% contraction in forward P/E multiples beating the 48% peak-trough observed during the 2008- 2009 recession.

  • Secondly, the Q1 IC shipments remained strong, while the China lockdowns negatively impacted May shipments.

  • Thirdly, aggregate supply chain inventories increased further, above historical levels for the third time in this upcycle— with inventories likely to increase further in 2Q, he saw a higher risk of a correction.

  • Fourthly, he slightly raised his 2022 IC revenue forecast to +14% from +13% prior, with better pricing offsetting lower units.

  • He noted that despite indications of an upcoming correction and recessionary fears, the peak-trough analysis would suggest that the current pullback already reflected many of these concerns.

  • He favored Advanced Micro Devices, Inc (NASDAQ: AMD) (reiterated Overweight; PT $130), Marvell Technology, Inc (NASDAQ: MRVL) (maintained Overweight; PT $90), Nvidia Corp (NASDAQ: NVDA) (reiterated Overweight; PT $230), ON Semiconductor Corp (NASDAQ: ON) (maintained Overweight; PT $80), and Qualcomm Inc (NASDAQ: QCOM) (reiterated Overweight; PT $220).

  • Price Action: AMD shares traded lower by 4.16% at $87.32 on the last check Friday.

Latest Ratings for MRVL

Date

Firm

Action

From

To

Mar 2022

Susquehanna

Maintains

Positive

Mar 2022

Summit Insights Group

Downgrades

Buy

Hold

Mar 2022

Morgan Stanley

Maintains

Equal-Weight

View More Analyst Ratings for MRVL

View the Latest Analyst Ratings

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