Investors in chipmakers are on the receiving end of good news this morning after a trio of semiconductor companies zipped past Wall Street’s earnings estimates after the close on Wednesday.
Proving their ability to rebound from recent setbacks, Lam Research Corp (NASDAQ:LRCX), Texas Instruments Inc (NASDAQ:TXN) and Xilinx Inc (NASDAQ:XLNX) all exceeded consensus estimates last night, which has pushed up share prices across the sector before the opening bell.
European chipmaker STMicroelectronics NV (NYSE:STM) also added to the cheer and calmed previous concerns about the possible retreat of the semiconductor sector by delivering an optimistic forecast for the second half of the year.
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The Geneva-based company reported fourth-quarter earnings of $418 million on revenue of $2.65 billion.
At the time of writing, Lam Research shares gained nearly 7% in pre-market trade to $148.32; Texas Instruments added 1.6% to reach $97.02; Xilinx shares popped by 10.3% to $98.80; Nvidia (NASDAQ:NVDA) added 2.7% to $153.36; Applied Materials (NASDAQ:AMAT) climbed 4.4% to $35.82; and ST Microelectronics jumped 8.6% to $15.31.
Baird chips in
In notes to investors, Baird analyst Tristan Gerra adopted a bullish view on Xilinx and on top of its Outperform rating, Gerra has now raised his price target on the stock to $105 from $90.
Among the catalysts driving growth at Xilinx, a top supplier of programmable logic devices, is the “rapidly expanding” market for its field-programmable gate arrays (semiconductor devices that are based around a matrix of configurable logic blocks), overall share gains and 5G exposure, Gerra wrote.
Xilinx reported earnings per share of $0.92 per share in its latest quarter, which was well above Gerra’s estimate of $0.86 and the consensus estimate of $0.84.
Gerra was more bearish on Dallas-based Texas Instruments, which fell short of the Street’s estimate for quarterly revenue, but beat on profit. The analyst lowered TI’s price target to $97 from $115 and reiterated his neutral rating on its shares.
“Weakness across most end-markets partially reflects customers reducing inventories,” warned Gerra in his note about TI.
Texas Instruments reported fourth-quarter earnings per share of $1.27, which was slightly above the midpoint of guidance of $1.14 to $1.34. Its first-quarter earnings-per-share guidance of $1.03 to $1.21 falls short of Gerra’s estimate of $1.27 as well as the consensus of $1.20.
Today’s upward momentum in the chip sector comes on the heels of worries that the sector could face a downturn.
At the start of the year, sentiment surrounding the semiconductor industry took a hit after the iPhone maker Apple slashed its quarterly sales forecast, citing a slowdown in iPhone sales in China. Samsung Electronics and Taiwan Semiconductor Manufacturing Co Ltd, two key chip suppliers to phone makers, also unsettled investors by issuing profit warnings.
Contact Ellen Kelleher at ellen@proactiveinvestors.com