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Morgan Stanley's Key CES Takeaways For Semi Companies

Wayne Duggan

This week’s Consumer Electronics Show in Las Vegas is one of the biggest events of the year for semiconductor companies and their investors. Morgan Stanley analyst Joseph Moore is attending this year’s event and outlined key takeaways for 10 semiconductor stocks in a Thursday note. 

Intel Corporation (NASDAQ: INTC)

Key Intel announcements included the launch of six new ninth-generation desktop processors from Core i3 to Core i9, the introduction of ninth-generation mobile processors that will hit the market in Q2 and a preview of the highly anticipated 10th-generation 10 nm Ice Lake client CPU with Sunny Cove micro architecture.

“The company discussed how its attacking a $300-billion market opportunity across PCs, data center, AI, 5G and autonomous driving."

Morgan Stanley has an Equal Weight rating and $55 price target for Intel.

Micron Technology, Inc. (NASDAQ: MU)

Moore said investor concerns over rising inventory levels are justified, but Micron is confident that current inventory is high-quality and relatively low-risk.

“Near-term pricing remains under pressure, reflecting multiple customers with excess inventories spanning multiple end markets."

Morgan Stanley has an Equal Weight rating and $37 price target for Micron.

NXP Semiconductors NV (NASDAQ: NXPI)

While NXP is expecting to launch new products for robotics and home appliances in Q1, Moore said the major takeaway from CES is the growth opportunity in electric vehicles.

“The highlights for automotive (45 percent of sales) were Radar for ADAS, BMS products, CAN secure networking and V2X."

Morgan Stanley has an Equal Weight rating and $100 price target for NXP.

Ambarella Inc (NASDAQ: AMBA)

Trade war headwinds and ongoing weakness in Ambarella's legacy business are near-term issues for the stock, but Moore said he's excited about the company’s long-term roadmap.

“The company showed 20 technology demos, none of which would individually move the stock, but which in totality demonstrate substantial and real progress with computer vision products CV2 and CV22, just a few months since sampling them to customers."

Morgan Stanley has an Overweight rating and $52 price target for Ambarella.

Analog Devices, Inc. (NASDAQ: ADI)

After meeting with management, Moore said ADI is optimistic about its integration of linear tech and the opportunity for cross-selling in power management.

“In autos, relative to the stronger growth seen at many peers where we see elevated risk of cyclical adjustments weighing on estimates in 1H19, the growth in ADI’s auto business has been muted and as such we expect less of an impact." 

Morgan Stanley has an Equal Weight rating and $100 price target for ADI.

NVIDIA Corporation (NASDAQ: NVDA)

Nvidia understandably focused its presentation on its new Turing ray tracing technology for gaming, but it also made some important updates regarding its auto division as well, Moore said.

“The idea here is to provide near-autonomous hardware capabilities for 2020 model year, but to limit the scope of that to more ADAS functionality, allowing a more evolutionary migration towards autonomy without massive hardware replacement."

Morgan Stanley has an Overweight rating and $220 price target for Nvidia.

Quantenna Communications Inc (NASDAQ: QTNA)

Quantenna reported confidence in transitioning its Wave 2 user base to 11 ax in the years ahead and is projecting Wave 2 revenue to be flat in 2019, Moore said.

“The company expects Wave 3 revenue growth to be driven by existing design wins across customers such as Comcast and its syndicate, Deutsche Telekom, etc. with new design wins this year to be mostly be 11 ax-based."

Morgan Stanley has an Overweight rating and $18 price target for Quantenna.

Advanced Micro Devices, Inc. (NASDAQ: AMD)

AMD’s keynote presentation was mostly focused on graphics, the analyst said.

“Overall, we see AMD's CPU portfolio positively, though we think that the ramp to share gains still takes time, as we have seen in recent quarters — and as the time frame on 7 nm CPUs looks to be second half, Intel's benefits on their comparable 10 nm process which launch at the same time will be key."

Morgan Stanley has an Underperform rating and $17 price target for AMD.

Marvell Technology Group Ltd. (NASDAQ: MRVL)

Moore said he met with head of business operations Chris Koopmans to discuss the integration of the Cavium portfolio and near-term challenges in the storage market.

“The biggest upside opportunity will be around 5G infrastructure with lead customer Samsung, which remains on track to ramp starting later this year."

Morgan Stanley has an Equal Weight rating and $20 price target for Marvell.

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