Is The Semiconductor Outlook Improving?
Michael Kramer | Jan 29, 2019 04:07PM ET
According to Semi.org, North American Semiconductor Billing Spending increased by almost eight percent in December versus November, the first increase in seven months. Whether it is the start of a new trend higher or just a pause in a steeper decline is the big question. But when we combine this with the Lam Research (NASDAQ:LRCX) results, we can see a glimmer of hope for the semis and global economic pick-up. Chips are used in nearly every aspect of our lives today, so if chips are doing better then it is likely to be a positive sign the economy is doing better.
There is a robust correlation historically with billings and the PHLX semiconductor index over the years. So let’s hope that the billings data suggests that the chip sector is due for a turn higher.
RBC upgraded Lam (NASDAQ:LRCX) to outperform from sector perform, and raised its price target to $190 from $160.
$169.60 is a level of technical resistance for the stock and should it rise above that level it could go to around $183.
Pfizer (NYSE:PFE) rose on Tuesday despite guiding its fiscal 2019 earnings to $2.87 at the mid-point versus estimates of $3.04. Meanwhile, the company sees revenue at $53 billion at the mid-point versus estimates of $54.3 billion.
The stock has fallen sharply over the past few months after reaching a multi-year high in November. The stock is trading near a significant level of support around $38, a drop below $38 sends the stock lower towards $37.
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3M (NYSE:MMM) rose Tuesday after it guided its 2019 EPS to $10.45 to $10.90 versus consensus of $10.70. At the mid-point, guidance is a touch below consensus.
The shares have struggled at resistance at $194, but it rose well above that level on Tuesday; it is likely to continue to be a battleground zone for the stock.
Verizon (NYSE:VZ) fell after it reported earnings that beat estimates by $0.03 per share but missed on revenue at $34.28 billion below consensus of $34.45 billion.
The stock is trading within a key level of support around $54.50. A drop below that region could send the stock lower back towards $52.
Square (NYSE:SQ) took a big hit Tuesday after Raymond James cut the stock to underperform from market perform. The stock is trading well below support at $74.80, but the trend is still higher at the moment.
NVIDIA (NASDAQ:NVDA) was downgraded by Morgan Stanley (NYSE:MS) to equal-weight from outperform; it was also lowered by Needham to underperform from buy but was upgraded at UBS to buy from neutral. Expect more upgrades/downgrade and price target changes in the days to follow after the disastrous quarter.
Resistance for the stock remains around $139, but downside risk continues to be around $121.
Disclaimer: Michael Kramer and the clients of Mott Capital own Apple (NASDAQ:AAPL), Verizon (NYSE:VZ), Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA)
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