Investors should boost their holdings of global semiconductor shares, including Texas Instruments Inc, because the stocks are cheap and earnings in the industry will improve, Credit Suisse First Boston said.
The brokerage raised its recommendation on the industry to "market weight" from "underweight," it said in a note to clients published on Monday. It is the first such upgrade on the industry in almost two years, the brokerage said.
"Earnings momentum relative to the market has turned up from an all-time low," Andrew Garthwaite, a London-based global equity strategist for CSFB, wrote in the note. "Normally, this sector outperforms three months after a trough in earnings momentum," he said.
Morgan Stanley Capital International Inc's World/Information Technology Index, which includes chipmakers such as Texas Instruments, has dropped 5.3 percent this year, while the broader MSCI World has slid 2.4 percent. Concern a cooling global economy will sap demand has fueled the drop.
CSFB strategists including Garthwaite said the bank's analysts recommend buying Texas Instruments, the world's biggest maker of mobile-phone processors. The brokerage also favors shares of Taiwan Semiconductor Manufacturing Co (台積電), the largest supplier of made-to-order chips, and Novellus Systems Inc, which makes machines used in chip manufacturing, because the stocks are cheap relative to their book value.
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