Why Freescale's Shares Flew

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Freescale Semiconductor (NYSE: FSL  ) saw some love from Wall Street this morning after Goldman Sachs analysts upgraded the stock from neutral to buy. Freescale was up over 11% immediately following the upgrade, but has given up a sliver of those gains in subsequent trading.

So what: This jump comes only a few weeks after Freescale plunged for far more substantial reasons -- lousy guidance. Goldman upgraded a basket of chip makers in addition to Freescale, with Applied Materials (Nasdaq: AMAT  ) and LSI (NYSE: LSI  ) both gaining about 5% today on Goldman upgrades. Freescale's extra-large pop relative to these peers is a bit odd, considering that it's the only unprofitable one of the trio, and pales in comparison to Applied Materials' much better metrics (including a nice dividend yield, to boot).

Now what: Goldman now projects significant upside in the stocks it's upgraded, but Freescale's got a long way to go to be considered attractively valued relative to its profitable peers. It's been some time since Freescale posted a net profit, but it's inched ever so close in recent quarters. Goldman might be right, but since Freescale's latest guidance actually calls for a decrease in gross margins, that prediction may take a few quarters to pan out.

Want more news and updates? Add Freescale to your Watchlist now.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights.

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