By Sam Boughedda
Citi analysts told investors in a note Monday that the firm sees four semiconductor stocks to own coming out of the downturn.
They explained the "SIA announced September monthly sales of $49.4 billion (up 3.9% MoM), below seasonality of up 10.9% MoM and our estimate of $51.7 billion (up 8.9% MoM) driven by below-seasonal sales across the board, except Flash. As a result, 3Q22 semi sales declined 6% QoQ, well below seasonality of up 6% QoQ and was the second consecutive quarter of sequential decline."
As a result of the lower-than-expected revenue, Citi lowered its 2022 semiconductor sales estimate from up 6% YoY to up 5% YoY.
The analysts stated that the firm remains cautious on semis due to inventory build and recession and reiterated Analog Devices (NASDAQ:ADI) as its top pick "given its defensive nature."
In addition, they pointed to Micron Technology (NASDAQ:MU), ON Semiconductor Corporation (NASDAQ:ON), GlobalFoundries Inc (NASDAQ:GFS), and Advanced Micro Devices, Inc. (NASDAQ:AMD) as stocks to own coming out of the downturn.
"Whenever the stock downturn ends, we prefer to own stocks with secularly increasing margins and/or EPS such as Micron, ON, GLOBALFOUNDRIES (GFS) and AMD as they should offer the most upside," the analysts wrote.