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The Zacks Analyst Blog Highlights: Advanced Micro Devices, Diodes and Qualcomm

Zacks Equity Research

For Immediate Release

Chicago, IL – July 2, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Advanced Micro Devices AMD, Diodes DIOD and Qualcomm QCOM.

Here are highlights from Monday’s Analyst Blog:

Semi Stocks You Should Consider Post-G20 Summit

On Monday, U.S. stocks are rising in response to the news of President Trump and Chinese leader Xi Jinping agreeing to hold off tariffs in order to resume trade talks. In addition to the ceasefire, President Trump announced that the U.S. will ease its regulations against American chipmakers selling their products to Chinese telecommunications giant Huawei.

The major indexes initially soared before paring back a bit amid the reached agreement at the G20; the S&P 500 rallied 1%, reaching an all-time high, while the DJIA rose 0.9%, and the NASDAQ Composite went up by 1.7%. Semiconductor stocks who were previously battered by the Huawei restrictions spiked broadly. Skyworks Solutions saw a more than 6% hike, Micron rose over 4%, and Broadcom jumped over 3%.

With semiconductors reaping the benefits of the temporary harmony between the U.S. and China, let’s see which chipmakers can use this momentum to break out to significant returns.

Advanced Micro Devices

Advanced Micro Devices has had a spectacular year thus far, with shares soaring 69.5% year-to-date. Piper Jaffray’s Chief Market Technician Craig Johnson commented on his enthusiasm for the stock, stating “A close above $33.50 on that stock would be a nice topside breakout and see an objective that would take the stock up into the mid-$40s.” If the chipmaker were to be able to reach $45 that would cement a 50% markup.

AMD is currently a Zacks Rank #3 (Hold) and was able to surpass earnings estimates last quarter for an EPS surprise of 20%. Our Zacks Consensus Estimates are currently projecting 69.23% earnings growth with a 16.96% increase in revenue for the next quarter. Double digit earnings growth is forecasted through the following year as well. The semiconductor is expected to grow substantially through the following years to come and would be a good consideration for investors looking for a sound long term investment.

Diodes

Diodes is another semiconductor stock that has already seen some solid growth recently. The chipmaker has been able to outpace our consensus estimate the past four quarters for an average EPS surprise of 8.33%. Diodes is up 18.5% in the last month and our consensus estimates are projecting the stock to sustain the growth.

For the current quarter, earnings are projected to grow almost 9% from the prior-year quarter, and current estimates sit at $0.75. Year-over-year estimates are calling for an earnings surge of 17.65% and a sales increase of 2.33% for the next quarter. Diodes is also currently trading at a discount relative to its industry average at just under 13X its forward earnings. The company looks to keep up the recent trend into the second half of the year with the recent boost the industry has experienced.

Qualcomm

Qualcomm is one of the stocks listed on Goldman Sachs’ list of companies with the most revenue exposure to China. The company has a whopping 67% of its revenue exposed to China, making the company especially vulnerable to continued tariffs and trade restrictions. The recent ceasefire agreement between the two countries sent the stock soaring by as much as 6% in intraday trading.

Qualcomm is currently sitting at a Zacks Rank #3 (Hold) and has also been on a recent uptrend. The semiconductor stock has seen an increase of 35.9% year-to-date stemming from a 33.1% surge over the past 3 months. The company has been able to beat our consensus estimate the past four consecutive quarters, for an average EPS surprise of 17.56%. For the current fiscal year, earnings are projected to grow roughly 3.5% on a year-over-year basis, while EPS could see double-digit growth next year.

If the U.S. and China can come to terms and reach a trade deal, Qualcomm shareholders can rest assured and the stock can be free to continue its recent success.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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