SanDisk Corp., National Semiconductor Corp. and Infineon Technologies AG led an advance in semiconductor stocks Tuesday as the broader markets climbed modestly and an analyst predicted a recovery in pricing of some memory chips.
The Philadelphia Semiconductor Sector Index rose 3 points to 412.31 by midday. The increase followed data released Monday by the Semiconductor Industry Association indicating worldwide semiconductor sales grew a healthy 5.9 percent in April.
Memory chip maker SanDisk rose as a ThinkEquity analyst predicted recent weakness in prices for NAND chips _ the type of flash memory typically used in devices like mobile music players, handsets and digital cameras _ will be short lived.
In a report to clients, Vijay Rakesh noted that pricing for NAND has softened in recent weeks during a lull in production of Apple Inc.'s iPhone. However, production is set to resume again shortly, which should help strengthen NAND pricing, according to Rakesh.
"We expect the NAND softness to last for only one to two weeks, as a resumption of holiday build could imply stable pricing again," he wrote.
Furthermore, "SanDisk back-to-school promotions at the electronic outlets Best Buy and Circuit City start this week, which should clear out some of its inventory, positioning SanDisk for a much stronger third-quarter."
Rakesh maintained a "Buy" rating and $40 price target on SanDisk, implying upside of 46 percent from the stock's Monday closing price of $27.34.
Additionally, late Monday SanDisk announced a new line of flash-based solid-state drives for ultra low-cost PCs. The products are set to debut in August.
Elsewhere, shares of National Semiconductor Corp. climbed $1.06, or 5.1 percent, to $21.88 ahead of the chip maker's fourth-quarter report scheduled for Thursday.
While RBC Capital Markets analyst Mahesh Sanganeria expects National Semiconductor to report results in line with Wall Street estimates, he predicted the company would guide for lower revenue in its fiscal first quarter. Sanganeria forecasts a 5 percent decline in first-quarter revenue year over year.
In a note to clients, Sanganeria maintained a "Sector Perform" rating and $18 price target.
Meanwhile, shares of German chip maker Infineon Technologies AG rebounded after comments by Chief Executive Peter Bauer at the company's shareholder conference reassured investors. The stock advanced 55 cents, or 6.2 percent, to $9.37 in midday trading, after losing nearly 3 percent on Monday.
Other notable movers among chip makers Tuesday included Jabil Circuit Inc., which rose 49 cents, or 3.5 percent, to $14.35, and LSI Corp., which climbed 20 cents, or 2.8 percent, to $7.24.
Terms & Conditions
RSS Headlines
Fool UK