Goldman Sachs highlights strong semiconductor shipments in August
Goldman Sachs has reported that semiconductor shipments in August surpassed typical seasonal trends, according to data from the Semiconductor Industry Association. Shipments of integrated circuits, excluding memory, rose by about 2% month over month, exceeding normal seasonal patterns. While most segments saw above-seasonal shipments, discrete, microcontrollers, and digital signal processors experienced worse-than-seasonal declines.
The overall shipment levels are now 10% above long-term demand on a three-month moving average, up from 7% above trend in July. Analog shipments are also running approximately 10% above trend. Goldman Sachs attributes the limited areas of weakness to broad consumer electronics softness but expects shipments to remain above trend in the medium term, citing below-trend shipments over the past four years.
The firm continues to favor Microchip, NXP, and Analog Devices, focusing on companies that shipped furthest below trend during the downturn. Microchip has seen a 25% gain over the past six months, with 16 analysts recently revising earnings upwards. The stock currently trades above its Fair Value estimate, according to InvestingPro analysis.
In other recent news, Microchip Technology reported fiscal first-quarter results that surpassed Wall Street expectations. The company achieved adjusted earnings of $0.76 per share on revenue of $1.48 billion, both exceeding forecasts. Microchip also provided guidance for the upcoming quarter, indicating anticipated growth in sales, margins, and profit. Shareholders approved an amendment to the company’s 2004 Equity Incentive Plan, authorizing an additional 12 million shares of common stock for issuance.
Cantor Fitzgerald reiterated an Overweight rating for Microchip Technology, maintaining a price target of $125, citing strengthening trends in the analog semiconductor sector. UBS adjusted its price target to $120 from $130 but maintained a Buy rating due to inventory concerns. The company reported a significant 13.2% sequential increase in revenue and a 38% rise from the previous year, with notable improvements in gross and operating margins.