Shares in semiconductor stocks have gained and lost value in about equal number during 2011. The run-up in share prices may be over for some and sustainable for others. For stocks that lost value during the year, gains in 2012 may be difficult to come by as the overall market for semiconductors has been getting softer as the new year gets closer.

We’ve looked 10 semiconductor companies and evaluated their chances of reaching existing price targets during the coming year. The companies are Intel Corp. (NASDAQ: INTC), Advanced Micro Devices Inc. (NYSE: AMD), Micron Technology Inc. (NASDAQ: MU), Broadcom Corp. (NASDAQ: BRCM), Qualcomm Corp. (NASDAQ: QCOM), ARM Holdings plc (NASDAQ: ARMH), SanDisk Corp. (NASDAQ: SNDK), Altera Corp. (NASDAQ: ALTR), Applied Materials Inc. (NASDAQ: AMAT), and Texas Instruments Inc. (NYSE: TXN). Data comes from Yahoo! Finance and MarketWatch.

Intel Corp. (NASDAQ: INTC) has a consensus price target of $27 and current price around $24.47, for a potential upside of 10.3%. Intel has put a lot of marketing muscle behind its Ultrabook design, with more models to come from more manufacturers in 2012. A new version of the Windows operating system is also due in late summer that should help with Ultrabook sales. Intel still hasn’t come up with a strategy to attack the mobile device market, and while that won’t be fatal, it could weigh on revenue and profits next year unless the Ultrabook is a blowout success.

Advanced Micro Devices Inc. (NYSE: AMD) has a consensus price target of $6.20 and a current price around $5.36, for a potential upside of 15.7%. AMD’s share price fell more than -33% in the past 12 months. The company introduced a new high-speed graphics chip recently that has been well-received. AMD’s server market share is wobbly though, although it has made progress in notebooks. But expecting a gain of more than 15% seems like wishful thinking.

Micron Technology Inc. (NASDAQ: MU) has a consensus price target of $8 and a current price around $6.24, for a potential upside of 28.2%. Micron’s shares jumped last week on a weak earnings report primarily on the basis of more expected consolidation in the DRAM market. Pricing has been weak for DRAM chips, but Micron is in a better position than most competitors to be among the survivors. Still, a lot of things need to go right for the company to hit its price target.

Broadcom Corp. (NASDAQ: BRCM) has a consensus price target of $41 and a current price around $29.53, for a potential upside of 38.8%. Broadcom has posted strong revenue and profit growth in 2011, but its share price has fallen by about -32%. Revenue and profit are both expected to continue growing in 2012, and the company is not a bad bet to hit its current price target.

Qualcomm Inc. (NASDAQ: QCOM) has a consensus price target of $67 and a current price around $54.86, for a potential upside of 22.1%. Qualcomm shares have gained more than 9% in 2011 and early in the year were up nearly 20%. The company has a firm position in the mobile device market and the company should continue to post growth in 2012. The upside potential of 22.1% is well within reach.

ARM Holdings plc (NASDAQ: ARMH) has a consensus price target of $26.95 and a current price around $27.38. ARM has surpassed its most recent price target and the company’s forward P/E ratio is north of 47. Shares gained nearly 35% in the past year, but royalty payments have begun to fall. The company’s shares are already priced at a premium and are not a likely value choice for the coming year.

SanDisk Corp. (NASDAQ: SNDK) has a consensus price target of $59 and a current price around $49.08, for a potential upside of 20.2%. SanDisk’s shares have finished the year about where they started it. Adding to the sour news for the company are rumors that Apple Inc. (NASDAQ: AAPL) may buy a NAND controller chip maker, cutting sharply into SanDisk’s sales of the chips for iPhones and iPads. An expected boost from a shortage of disk drives is soon to peter out as well.

Altera Corp. (NASDAQ: ALTR) has a consensus price target of $40 and a current price around $37.45, for a potential upside of 6.8%. The communications chip maker is facing weakness in demand and its weak sales growth could get weaker. The low potential upside here also indicates that the stock is nearly fully valued.

Applied Materials Inc. (NASDAQ: AMAT) has a consensus price target of $13 and a current price around $10.72, for a potential upside of 21.3%. AMAT’s shares have plummeted -24% in the past year as the market for semiconductor manufacturing equipment in the solar PV space has about dried up. The company expects two or three years of belt-tightening, and there’s likely no reason for anyone else to be optimistic either.

Texas Instruments Inc. (NYSE: TXN) has a consensus target price of $33.50 and a current price around $29.29, for a potential upside of 14.4%. TI recently completed its purchase of National Semiconductor and the combination should add about 10% to revenues next year. The company recently warned on earnings, suggesting that a bottom is yet to be seen in the chip market. While it’s possible that TI can hit its price target in the next year, it’s not likely.

Overall, the safe play in semiconductors is Intel after its most recent warning. The enormous push that the company is giving to the Ultrabook and the coming announcement on its mobile strategy should make the 10% upside potential a reality. Broadcom and Qualcomm are the other good bets to post share price gains, even if the gains don’t quite match the upside potentials.

Perhaps one of the biggest questions, which is still only partially answered, is Thailand’s floodzone recovery for the technology supply chain.

Paul Ausick

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