Today’s report that Intel Corp. (NASDAQ: INTC) plans to cut the power consumption of its Core line of chips by more than 40% shines a spotlight on the whole semiconductor sector. Intel’s dominance of the PC chip market does not extend to the much faster-growing smartphone and tablet market, and that extension is critical to the company’s future success.
We’ve looked at the following companies, in addition to Intel, with an eye toward seeking out a value play in the sector: Advanced Micro Devices Inc. (NYSE: AMD), Micron Technology Inc. (NASDAQ: MU), SanDisk Corp. (NASDAQ: SNDK), Qualcomm Inc. (NASDAQ: QCOM), ARM Holdings PLC (NASDAQ: ARMH), Broadcom Corp. (NASDAQ: BRCM), Marvell Technology Group Ltd. (NASDAQ: MRVL), Nvdia Corp. (NASDAQ: NVDA), Texas Instruments Inc. (NASDAQ: TXN) and Applied Materials Inc. (NASDAQ: AMAT).
Intel Corp. (NASDAQ: INTC) traded at $24.25 and has a market value of around $121 billion. The consensus target price from Thomson Reuters is $28.74 and the 52-week range is $19.16 to $29.27. Intel pays a dividend yield of 3.6%. The implied upside to the consensus target is 18.5%, and we note that the target is below the 52-week high. Short interest in the stock totals 152.4 million shares, or 3% of the float.
Advanced Micro Devices Inc. (NYSE: AMD) traded at $3.46 (a new 52-week low of $3.42 posted this morning) and has a market value of around $2.5 billion. The consensus target price from Thomson Reuters is $5.56 and the 52-week range is $3.60 to $8.35. AMD does not pay a dividend. The implied upside to the consensus target is 61%, and we note that the target is well below the 52-week high. Short interest in the stock totals 99 million shares, or 18.1% of the float.
Qualcomm Inc. (NASDAQ: QCOM) traded at $60.42 and has a market value of around $103 billion. The consensus target price from Thomson Reuters is $69.86 and the 52-week range is $46.40 to $68.87. Qualcomm pays a dividend yield of 1.6%. The implied upside to the consensus target is 45%, and we note that the target is above the 52-week high. Short interest in the stock totals 3.74 million shares, or 12.4% of the float.
ARM Holdings PLC (NASDAQ: ARMH) traded at $25.16 and has a market value of around $11.5 billion. The consensus target price from Thomson Reuters is $30.31 and the 52-week range is $21.64 to $31.55. ARM pays a dividend yield of 0.5%. The implied upside to the consensus target is 20%, and we note that the target is above the 52-week high. Short interest in the stock totals 6.9 million shares.
Micron Technology Inc. (NASDAQ: MU) traded at $6.10 and has a market value of around $6.2 billion. The consensus target price from Thomson Reuters is $9.80 and the 52-week range is $3.97 to $9.16. Micron does not pay a dividend. The implied upside to the consensus target is 61%, and we note that the target is above the 52-week high. Short interest in the stock totals 67 million shares, or 8.6% of the float.
SanDisk Corp. (NASDAQ: SNDK) traded at $40.95 and has a market value of around $9.8 billion. The consensus target price from Thomson Reuters is $44.80 and the 52-week range is $30.99 to $53.46. SanDisk does not pay a dividend. The implied upside to the consensus target is 9%, and we note that the target is well below the 52-week high. Short interest in the stock totals 9.6 million shares, or 3.9% of the float.
Broadcom Corp. (NASDAQ: BRCM) traded at $35.19 and has a market value of around $19.6 billion. The consensus target price from Thomson Reuters is $41.20 and the 52-week range is $27.59 to $39.66. Broadcom pays a dividend yield of 1.1%. The implied upside to the consensus target is 17%, and we note that the target is above the 52-week high. Short interest in the stock totals 7.6 million shares, or 1.5% of the float.
Marvell Technology Group Ltd. (NASDAQ: MRVL) traded at $10.22 and has a market value of around $5.7 billion. The consensus target price from Thomson Reuters is $14.03 and the 52-week range is $10.03 to $16.86. Marvell pays a dividend yield of 2.4%. The implied upside to the consensus target is 37%, and we note that the target is below the 52-week high. Short interest in the stock totals 5.4 million shares, or 1.1% of the float.
Nvidia Corp. (NASDAQ: NVDA) traded at $13.48 and has a market value of around $8.2 billion. The consensus target price from Thomson Reuters is $17.76 and the 52-week range is $11.47 to $16.90. Nvidia does not pay a dividend. The implied upside to the consensus target is 32%, and we note that the target is above the 52-week high. Short interest in the stock totals 10.6 million shares, or 2.1% of the float.
Texas Instruments Inc. (NASDAQ: TXN) traded at $28.86 and has a market value of around $32.6 billion. The consensus target price from Thomson Reuters is $31.46 and the 52-week range is $25.46 to $34.24. TI pays a dividend yield of 2.3%. The implied upside to the consensus target is 9%, and we note that the target is above the 52-week high. Short interest in the stock totals 18.4 million shares, or 1.6% of the float.
Applied Materials Inc. (NASDAQ: AMAT) traded at $11.86 and has a market value of around $14.6 billion. The consensus target price from Thomson Reuters is $13.00 and the 52-week range is $9.70 to $13.94. Applied Materials pays a dividend yield of 3.2%. The implied upside to the consensus target is 10%, and we note that the target is below the 52-week high. Short interest in the stock totals 17.6 million shares, or 1.4% of the float.
The semiconductor market is forecast to continue shrinking as smartphone and tablet sales continue to rise. Most of the chip makers, with the exceptions of AMD and Qualcomm, have quite modest short interest, indicating that the sector is reasonably stable. Companies that appear to be nearly fully valued include SanDisk, Texas Instruments and Applied Materials. Companies with implied gains of 30% or more could be an opportunity or a value trap. Our view is skewed more toward the latter than the former. That leaves just Intel, ARM and Broadcom, each of which has a singular strength. Not a bad lot to pick from.
Paul Ausick
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