Why Altera Corporation Shares Will Pop 20%

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Altera  (NASDAQ: ALTR  ) rallied 2% today after RBC Capital upgraded the semiconductor company from sector perform to outperform.

So what: Along with the upgrade, analyst Doug Freedman raised his price target to $39 (from $36), representing about 19% worth of upside to Friday's close. So while momentum traders might be turned off by Altera's pullback in recent months, Freedman's call could reflect a sense on Wall Street that its growth prospects are becoming too cheap to pass up.

Now what: According to RBC, Altera's risk/reward trade-off is rather attractive at this point.  Freeman remarked:

We continue to see stronger deployment globally which should support Y/Y growth expectations in the Wireless segment, as builds at China Unicom and China Telecom should augment growth in the China market in 4Q14... Moreover, the transition to 14nm in 2015 should drive share gains and operating margins higher given architectural advantages driven by a strong design team. ALTR fits the mold of a semiconductor company that has become increasingly focused on increasing shareholder returns.

When you couple that upbeat outlook with Altera's strong balance sheet and beaten down stock price -- still off about 15% from its 52-week highs -- it's tough to disagree with RBC's upgrade.

More compelling ways to grow
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2963270, ~/Articles/ArticleHandler.aspx, 12/22/2014 11:24:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement