Weekly Tech Notes: INTC, NVDA, AMD, BRCM, FFIV

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INTC: Intel logo
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Intel

Semiconductor stocks have been one of the top performing sectors in 2014, significantly outperforming the S&P 500 index. Year to date, the SOX (Philadelphia Semiconductor Index) has increased 21%, significantly outgrowing the 8% gain in the S&P 500 index and the 10% increase in the Morgan Stanley High Tech Index (a proxy for the technology sector as a whole) over the same interval.  Having regained its growth momentum in 2013, the semiconductor market is expected to grow 4.4% in 2014, though brokerage analysts have estimates of 8% to 12%.  The Semiconductor Industry Association this week released global sales data for July of $28.1 billion, an increase of 10% over the prior year and the highest monthly posting ever. [1] This would seem to support the higher rate.

Below is a weekly update for some of the technology companies that Trefis covers.

See Our Complete Analysis for These Companies Here

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Intel

Leading chip manufacturer Intel (NASDAQ:INTC), in collaboration with fashion company Opening Ceremony, unveiled the smart bracelet MICA (My Intelligent Communication Accessory) this week. (Read: Intel & Opening Ceremony Introduce MICA – A fashionable Wearable Device) The company also launched a major graphics driver update for the 4th generation Intel Core processors and announced an Android tablet (RealPad), in collaboration with AARP, for American’s above the age of 50 who have yet to fully embrace tablet technology. Additionally, various new tablets were launched based on Intel’s Atom processors by Toshiba, Lenovo and Acer.

Intel’s stock traded close to $35 this week. Our valuation of $33 (market cap of $162 billion) for the company is only marginally lower than the current market price (market cap of $172 billion). We expect Intel to report revenue of around $53 billion and net income of $10 billion for 2014. We forecast non-GAAP diluted EPS of $2.18, which is inline with the market consensus of $2.17 (Reuters).

Nvidia

For the first time since its inception, Nvidia initiated a patent lawsuit against rival firms Qualcomm (NASDAQ:QCOM) and Samsung Electronics (PINK:SSNLF) for infringing its GPU patents. Nvidia has filed a complaint with both the U.S. International Trade Commission (ITC) and the U.S. District Court, in Delaware, asking to  block shipments of Samsung Galaxy mobile phones and tablets containing Qualcomm’s Adreno, ARM’s Mali or Imagination’s PowerVR graphics architectures. (Read Nvidia’s Press Release)

Nvidia’s stock price hovered around the $19 – $20 level this week. Our price estimate of $19 for Nvidia is slightly lower than the current market price. The company has a market cap of nearly $11 billion. We estimate Nvidia will report revenues of around $4.3 billion and net income in excess of $600 million this year. We forecast a non-GAAP diluted EPS of $1.42 as compared to the market consensus of $1.00.

AMD

AMD (NYSE:AMD) set a new world record for silicon processor speed, demonstrating record-setting performance of its AMD FX series processors. The company also introduced new speed- and power-optimized AMD FX Series CPUs for high-performance desktops (Read AMD Press Release), a new Radeon graphics card (R9 285) designed to run the most demanding games and the latest iteration of AMD’s popular game bundle promotion – Never Settle: Space Edition (Read AMD Press Release).

AMD’s stock price remained flat at around $4.2 this week. Our valuation of $4.17 is almost in line with the current market price, which translates into market cap of approximately $3.2 billion. We forecast AMD’s 2014 revenue to increase to $5.4 billion and net income to turn positive by year end. Our GAAP and non-GAAP diluted EPS estimates stand at $0.15 and $0.37, respectively.

Broadcom

Leading semiconductor provider for wired and wireless communications, Broadcom (NASDAQ:BRCM) announced the industry’s most powerful 5G WiFi combo chip for mobile devices. The company claims that the new chip enables OEMs to design high-end smartphones and tablets with twice the Wi-Fi performance, unlocking the full potential of today’s smartphones and tablets. (Read Broadcom Press Release)

Broadcom’s stock increased marginally this week (~2%). Our valuation of $38.50 for Broadcom is in line with the current market price, which translates into market cap of approximately $23 billion. Our 2014 revenue and net income estimates for the company stand at $8.7 billion and 720 million respectively. Our non-GAAP diluted EPS forecast is $2.98, as compared to the market consensus of $2.55.

F5 Networks

F5 Networks (NASDAQ:FFIV), a leading provider of technology that optimizes the delivery of network-based applications, introduced new Software Defined Application Services (SDAS) for its physical and virtual BIG-IP solutions. (Read Press Release) The company also announced winning the award for the Best Cloud Management Marketplace Solutions at last week’s VMworld 2014 conference.

The stock price crosed the $125 level during the week but fell to $123 towards the end. Our price estimate of $118 (approx. $9 billion market cap) for F5 Networks is slightly lower than the current market price. We expect the company to witness double digit growth in its revenue for calendar 2014. Our non-GAAP diluted EPS estimate for fiscal year 2014 (ending September) stands at $5.12, as compared to the market consensus of $5.33.

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Notes:
  1. Global Semiconductor Market Maintains Broad, Consistent Growth in July []