The semiconductor industry has been hammered in 2022. Early in the year, lingering effects of a supercharged growth spurt turned sour. The slide began in March of 2020 as a result of the COVID-19 pandemic. Demand from personal computer and server makers tailed off as these companies focused on clearing out excess inventories.

More recently, cost pressures have increased due to higher interest rates, weighing on original equipment manufacturers’ purchasing power. Demand for chips from the technology and auto industries has fallen in each of the past two months. Share prices that had been sliding since January began rising in late June. The shift was short-lived though. Tech stocks started sliding again in early August.

Exane BNP Paribas analyst Karl Ackerman has now waded into the pool, initiating coverage of six tech stocks, including four chipmakers and two hard drive makers.

Ackerman’s top pick is Marvell Technologies Inc. (NASDAQ: MRVL), a maker of a variety of analog, mixed-signal, DSP, embedded and standalone chips. Storage companies are among Marvell’s leading customers and have been for years. That may be partly the reason for the company’s shift in focus to enterprise-level data infrastructure.

Exane BNP has rated the stock as Outperform and placed a price target of $62 on the shares. Ackerman noted that Marvell’s strong portfolio of computing, networking and storage technologies has given it a solid grip on solutions for data centers, 5G infrastructure and the auto industry. The average price target among 32 brokerages covering Marvell is about $74.50, and the stock is a solid Buy. Shares were battered Tuesday thanks to the latest consumer price index report, which has led investors to believe that the Federal Reserve will raise interest rates again at next week’s Open Market Committee meeting. The stock traded down by about 4.3%, at around $48.10 in a 52-week range of $41.07 to $93.85.

Memory chip maker Micron Technology Inc. (NASDAQ: MU) also got an Outperform rating from Ackerman. The company’s DRAM memory business is expected to enter a cyclical downturn before the flash memory business does, but Micron’s process expertise should give the company an edge over its competitors.

Along with the Outperform rating, Ackerman put a price target of $75 on the stock, just below the $75.50 average target of 34 brokerages. Analysts are generally bullish on the stock, with 27 giving the shares a Buy or Strong Buy rating. The stock traded down by about 4.7% to $55.20, in a 52-week range of $51.40 to $98.45.

The third chipmaker to get an Outperform rating from Ackerman was Skyworks Solutions Inc. (NASDAQ: SWKS). The company’s fortunes have long depended on smartphones, but demand for new smartphones has slowed, lowering investor sentiment for Skyworks. Yet, Ackerman argues, its position as a supplier to Apple and its diversification into the auto, industrial and Internet of Things markets should position the company well for the future.
Ackerman’s $120 price target on Skyworks stock is well short of the average target of around $137.60 from 28 analysts covering the stock. The average rating on the stock is less bullish than on either Marvell or Micron, with half of analysts rating the shares at Buy or Strong Buy. Shares traded down by about 3.8% Tuesday morning, at around $99.65 in a 52-week range of $88.76 to $182.24.

Qorvo Inc. (NASDAQ: QRVO) receive a Neutral rating from Exane BNP. The company designs and makes chips for wireless (RF) and wired connectivity products. It operates in two divisions: Mobile Products and Infrastructure and Defense products. Ackerman’s rating is based on a continued slowdown in Android smartphone production in China.

Ackerman’s price target on the stock is $100, well below the average target of around $119.25. Of the 27 brokerages covering the company, just 10 have a Buy or Strong Buy rating, while 16 rate the stock at Hold. Shares traded down by about 5.5% Tuesday morning to around $88.30. The 52-week range is $87.05 to $183.55.

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Hard drive maker Seagate Technology Holdings PLC (NASDAQ: STX) also received a Neutral rating. Ackerman expects Seagate’s earnings per share to rise to $8.60 more quickly than generally expected, based on projected demand for more hard-disk storage.

Ackerman is solidly in the majority camp that includes 16 of 25 analysts with a Hold rating on the stock, and his $70 price target is below the average target of $76.25. Another eight analysts have a Buy rating on the shares. The stock traded down about 3.3% on Tuesday to $66.47, in a 52-week range of $63.50 to $117.67.

Western Digital Corp. (NASDAQ: WDC) is the other big storage device maker. Unlike Seagate, Western Digital likely will be hit harder by the downturn in the flash storage business. Hard drive sales also are likely to decline year over year through the next couple of quarters. Ackerman thinks that the consensus earnings estimate is too high by about 40% and has given the company an Underperform rating with a price target of $30.

That price target is about half the average target of $59.00 from 27 brokerages covering the shares. Of those brokers, 15 have a Buy or Strong Buy rating. Western Digital stock traded down about 6.7% Tuesday morning to $40.38. The 52-week range is $40.13 to $69.36, and that low was posted last week.

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