Tech stocks: No shine for chipmakers till later in 2012
When it comes to semiconductor stocks, patience will pay off, says C.J. Muse, managing director of Barclays Capital.
聽"Inventories will be depleted in the first quarter," he said, adding that Barclays expects this slow start to precede growth for the year from flat to 4 percent across the sector.
聽For now, stick with equipment stocks, says Muse, where a different business cycle means inventories aren't an issue, and an overall market lift should carry equipment.聽
聽Muse likes equipment makers聽Lam Research听补苍诲听Teradyne.
聽"For the next two-plus months we're looking for earnings surprises from equipment and earnings cuts for the semiconductor names."
聽But as soon as inventories start to roll in, Muse is betting on semiconductors:聽Qualcomm,听Broadcom,听Micron Tech, and聽Altera.
Semiconductor giant聽Intel聽is not on this list, despite a pop in the stock late December. "We see the Windows 8 push heading into [the third quarter], impacting PC demand particularly for microprocessors" like Intel, says Muse.
聽The third-quarter release of the latest Windows operating system could drive higher PC sales once consumers upgrade their hardware to be more compatible with the new software. This stands to benefit the chipmakers, like Intel, whose component microchips are in the PCs.
聽For this reason, Barclays revised its expectations for Intel, saying it expects earnings to be lower in the first half of 2012 than in the second half.聽
