💡 Bank of America confirms its optimistic outlook for the semiconductor sector: however over the past few years, the sector has grown only ~ 2%, the Bank now expect for the 2021 a growth of approx. 8%.
The limited growth of recent years was associated with the difficult landscape provided by US-China trade wars and the end of the 4G smartphone sales cycle.
The projected growth will lead industry to be worth more than $ 500 billion despite the following factors:
• The growth of cloud technologies, the use of artificial intelligence, smart technologies for industries, homes and the Internet of things.
• Trends in telecommunication will remain strong beyond vaccination.
• Recovery of the automotive industry
• Increased use of 5G-enabled smartphones and wireless infrastructure.
• Stabilization of prices for memory devices.
👉🏻 Semiconductor major player will, in BoA view, see exponential growth despite any market cycle:
✅ Nvidia Corp. #NVDA
✅ Marvell Technology Group. #MRVL
👉🏻 There is a prediction of 20% revenue growth with 30% earnings per share (EPS) growth through 2022.
👉🏻 In addition the sales of semiconductor manufacturing equipment is expected to grow in 2020 and 2021 by 17% and 8%, respectively. This is due to more moderate restrictive measures from China and continued high demand.
Among others, we have identified the below as interesting picks for the sector:
✅ Applied Materials #AMAT
🎯 Target price - $ 93, upside potential + 12%.
✅ Lam Research #LRCX
🎯 Target price - $ 485, upside potential + 9%.
✅ KLA Corporation. #KLAC
🎯 Target price - $ 268, upside potential + 7%.
✅ NXP Semiconductors. #NXPI
🎯 Target price - $ 175, upside potential + 12%.
✅ Lam Research Corp. #LRCX
🎯 Target price - $ 485, upside potential + 9%.
✅ II-VI Inc. #IIVI
🎯 Target price - $ 80, growth potential + 20%.
✅ Skyworks Solutions Inc. #SWKS
🎯 Target price - $ 165, upside potential + 16%.
OTB Global Investments
London, 2 December 2020
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