Analyst Update: NXP Semiconductors NV, Analog Devices, Inc., and Maxim Integrated Products Inc.

BofA-Merrill Lynch downgraded semiconductor stocks NXP Semiconductors NV (NASDAQ:NXPI), Analog Devices, Inc. (NASDAQ:ADI), and Maxim Integrated Products Inc. (NASDAQ:MXIM)

by Josh Selway

Published on Jun 27, 2016 at 3:17 PM

Brokerage firm BofA-Merrill Lynch is weighing in on semiconductor stocks NXP Semiconductors NV (NASDAQ:NXPI)Analog Devices, Inc. (NASDAQ:ADI), and Maxim Integrated Products Inc. (NASDAQ:MXIM), downgrading all three to "neutral" from "buy." The analysts cited the unexpected "Brexit" vote and a slower seasonal period, which should imply "a cautious stance" on semiconductor stocks until at least the end of second-quarter earnings season/late August. Below, we'll take a closer look at how this bearish outlook is affecting NXPI, ADI, and MXIM. 

  • NXPI has lost 5.8% to trade at $75.40, as BofA-Merrill Lynch also cut its price target by $20 to $90. The stock has now lost almost 23% in the past 12 months, and short selling is starting to pick up. Specifically, short interest popped by over 19% during the past two reporting periods. Analysts, on the other hand, are overwhelmingly optimistic toward NXP Semiconductors NV, with 15 of 16 calling the stock at least a "buy," while none recommend selling it. 
  • ADI has shed 5%, and was last seen at $52.30, set for its worst close since Feb. 24, with BofA-Merrill Lynch trimming its price target by $1 to $60. While short interest has actually been declining on the stock, options traders have taken a strong interest in put buying. In fact, more than 3,300 puts were bought to open over the past two weeks on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just 60 calls. Meanwhile, analysts' are mostly bullish, with 13 of 20 calling Analog Devices, Inc. at least a "buy." 
  • Lastly, MXIM has dropped 4.1% to hit $33.67, bringing its year-to-date deficit to 11.4%. What's more, BofA-Merrill Lynch cut its price target to $39 from $41. This is all likely bad news for options traders, since nearly 43 call options have been bought to open for every put option during the past two weeks at the ISE, CBOE, and PHLX -- albeit amid relatively low absolute volume. Meanwhile, analysts are mixed on Maxim Integrated Products Inc., with 10 brokerages giving the shares a "hold" or worse rating, versus nine "buy" or better suggestions.

For other stocks in analysts' crosshairs, read Analyst Upgrades: Barrick Gold Corporation (USA), Eldorado Gold Corp (USA), and Goldcorp Inc. (USA) and Analyst Downgrades: McDonald's Corporation, Barclays PLC (ADR), and Deutsche Bank AG (USA).


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