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Citi launches positive catalyst watch on GlobalFoundries, Pivotal Research upgrades Roku

Yahoo Finance anchors discuss the call of the day on chip stocks and Roku.

Video Transcript

BRIAN SOZZI: All right, let's hit some calls of the day here. Shall we, Julie? I'm zeroed in on a note from Citi following day one of its global tech conference. Really interesting note, round up note by the folks over at Citi, led by Chris Danely. We mentioned him earlier on in the show and his meeting or his dinner with Intel CEO Pat Gelsinger, calling out a couple of things. One, some fraying at the edges. That's what Danely says with respect to NXP semiconductor, Texas Instruments most notably, noting that updates at the conference from these companies were positive.

But he did notice some signs of concern, notably with XRP, about sales weakness in Europe and a little bit less product shortages. Texas Instruments talking about the potential impact of China shutdowns in Avnet-- that's another one mentioned here, AVT-- mentioning declines in lead times and backlog monitoring. So some mixed commentary on that front, but sounding a lot more positive on GlobalFoundries, potentially looking for a release from the company over the next day or two, lifting its guidance.

JULIE HYMAN: Interesting. I mean, there are so many notes coming out on semis right now and all this stuff. I've got an interesting note on Pivotal that I'm watching, my call the day that you actually flagged for me. It's on Roku. Pivotal Research upgrading the media company to hold from sell. This is a really tepid upgrade, just saying, in terms of the enthusiasm.

So, basically, the analyst says, shares have reached a level that we view as properly balancing risk-reward. We would take profit on short positions. They say recent encouraging news on inflation making a soft landing more realistic could be positive for Roku. But at the same time, they list a bunch of negatives having to do with Roku here, that it's getting hit materially harder than advertising peers, that the ad environment is going to get worse before it gets better. The company spending more money on things like R&D and sales and marketing--

BRIAN SOZZI: You like this stock?

JULIE HYMAN: Results for at least the next six months are likely to be, frankly, mediocre.

BRIAN SOZZI: Wow.

JULIE HYMAN: All of that said, I guess it's priced in, to some degree, that pretty negative outlook coming here from Pivotal.

BRIAN SOZZI: Sounds like a resounding upgrade there. Sounds very confident. Now, real briefly, I'll add this, too. A couple of days, I caught up with Roku CFO Steve Louden. I think they're going through some stuff right now. I think they have to get their expenses under control. They have to start regrowing that subscriber base in this post-pandemic world. So, interesting upgrade over there--

JULIE HYMAN: Yes.

BRIAN SOZZI: --for sure.