ADD to BW2411, NY-INVESTEC-2.Business Editors NOTE: The following news release replaces the previous Investec news release, which ran earlier today on Business Wire, BW2411 (NY-INVESTEC-2). This revised version includes prices for the stocks. Investec Announces Investment Opinion: Investec Lead Semiconductor Analyst Eric Ross Initiates Coverage of the Semiconductor Industry Business Editors NOTE TO EDITORS: The following is an investment opinion issued by Investec Inc. NEW YORK--(BUSINESS WIRE)--June 24, 2002 Investec Lead Semiconductor Analyst Eric Ross Initiates Coverage of the Semiconductor Industry Sees Bottom of Semiconductor Cycle and Beginning of Major Upturn Initiating Coverage on Intel, Micron Technology, Zoran, ESS Technology, nVIDIA, Advanced Micro Devices, SanDisk, Analog Devices, Altera, Atmel, Linear Technology, LSI LSI: see integrated circuit. (Large Scale Integration) Between 3,000 and 100,000 transistors on a chip. See SSI, MSI, VLSI and ULSI. Logic, Maxim Integrated Products, Microchip Technology STMicroelectronics, Texas Instruments, and Xilinx Eric Ross, Director of Electronics Research and Lead Semiconductor Analyst at Investec Inc., has initiated coverage of the Semiconductor Industry. "We believe this is an opportune time for investors to play the major end-market drivers of semiconductor growth, as we believe we are at the bottom of the cycle and likely at the beginning of a major upcycle," Ross said. "We believe PCs and consumer electronics will be the two major drivers for the semiconductor industry over the next 18 months." "Our top picks in the semiconductor industry based on our end-market focused themes are Intel Corporation (INTC INTC Intel (NASDAQ symbol) INTC Intercept INTC Interrupt Controller : $18.74 - STRONG BUY) and Micron Technology, Inc. (MU: $18.79 - STRONG BUY) for PCs, and Zoran Corporation (ZRAN: $$20.48 - STRONG BUY) and ESS Technology, Inc. (ESST ESST European Inter-University Association on Society, Science and Technology ESST European Society of Sleep Technologists ESST Environmental Simulation for Sensitivity Training : $16.84 - STRONG BUY) for DVD players. True value investors may wish to look at nVIDIA Corporation (NVDA NVDA NVIDIA Corp (stock symbol) NVDA Non-Violent Direct Action (direct resistance lobbying) NVDA NonVisual Desktop Access (open-source screen reader) : $22.66 - BUY), Advanced Micro Devices, Inc. (AMD (Advanced Micro Devices, Inc., Sunnyvale, CA, www.amd.com) A major manufacturer of semiconductor devices including x86-compatible CPUs, embedded processors, flash memories, programmable logic devices and networking chips. : $8.04 - BUY) and SanDisk Corporation (SNDK: $9.76 - BUY)," he said. Intel Corporation (INTC: $18.74 - STRONG BUY). We initiate Intel with a STRONG BUY rating and a 12-month price target of $35. This is 39x our CY03 EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. estimate of $0.90. We pick Intel as the leading beneficiary of a potential PC resurgence and the resulting strength in microprocessors due to its roughly 80% unit share. We believe PC unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. are poised to improve in 4Q02 and more strongly in 2003 driven by consumer seasonality and corporate reinvestment. Micron Technology, Inc. (MU: $18.79 - STRONG BUY). We initiate Micron Technologies with a STRONG BUY rating and a 12-month price target of $35, or 13x our CY03 EPS estimate of $2.60. Micron and DRAM demand will likely be driven primarily by increasing memory per box, driven by upgrades, incentives, and increasing Windows XP computers. Vastly increasing memory per box, combined with improved spot pricing and its low cost base, makes Micron our top pick for the PC channel. Zoran Corporation (ZRAN: $20.48 - STRONG BUY). We initiate ZRAN Corporation with a STRONG BUY rating and a 12-month price target of $35. This is 32x our CY03 EPS estimate of $1.10. We believe the stock is under valued given its growth rate. Zoran is the technology leader in DVD players with the best OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and relationships. ESS Technology, Inc. (ESST: $16.84 - STRONG BUY). We initiate ESS Technology with a STRONG BUY rating and a 12-month price target of $30. This is 19x our CY03 EPS estimate of $1.60. We believe the stock is under valued given its growth rate -- ESST is trading at 8x our CY03 net of cash EPS with a revenue growth rate of 15% in 2003 for a P/E P/E See: Price/earnings ratio to sales of 0.5x. The end-market driver is the DVD player market wherein ESST derives 53% of its sales from DVD players. We believe this market will grow 61% year over year from 31m units in CY01 to 50m in CY02. nVIDIA Corporation (NVDA: $22.66 - BUY). We initiate nVIDIA with a BUY rating and a 12-month price target of $30. This is 13x our CY03 EPS estimate of $2.30. nVIDIA will continue to be the leading provider of high-performance graphics processors with its cascading tier of GeForce processor lines. We believe nVIDIA's strategy of moving into the high performance consumer chipset market with nForce can potentially open up approximately a $1.0 billion or greater market with similar profitability to the corporate average. Advanced Micro Devices, Inc. (AMD: $8.04 - BUY). We initiate Advanced Micro Devices with a BUY rating and a 12-month price target of $11. This is 73x our CY03 EPS estimate of $0.15. On a price to sales basis, AMD is undervalued Undervalued A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. compared to its peers. AMD trades at 0.7x price to sales compared to an average of 1.9x for its peers. AMD should be considered for deep value players, as we believe the leverage on its model may meaningfully increase earnings upon a small increase in its revenue run rate. SanDisk Corporation (SNDK: $9.76 - BUY). We initiate coverage Initiate coverage (1) Firm is now followed by analysts at a particular securities house; (2) Indication to cover short position by purchasing the underlying stock (this cancels out the short position). of SanDisk with a BUY rating and a 12-month price target of $13. This target is 39x our CY03 EPS estimate of $0.33. SanDisk is positioned well competitively, and it is likely to maintain share. By leveraging its rich patent base and multiple flash storage platforms, it has become the premier supplier of the flash storage market and its share leader. Investec also initiated coverage of Analog Devices, Inc. (ADI: $29.36) with a BUY recommendation and has initiated coverage of Altera Corporation (ALTR: $13.96), Atmel Corporation (ATML ATML Automatic Test Markup Language ATML Automated Test Markup Language : $5.83), Linear Technology Corporation (LLTC LLTC Liquid-Liquid Thermal Cycling : $29.08), LSI Logic Corporation (LSI: $8.41), Maxim Integrated Products, Inc. (MXIM: 36.62), Microchip Technology, Inc. (MCHP MCHP Maryland Children's Health Program MCHP Microchip Technologies (stock symbol) MCHP Micro-sized Combined Heat and Power (American Honda Motor Co. & Climate Energy, LLC) MCHP Maine Community Heritage Project : $26.57), STMicroelectronics N.V. (STM (Scanning Tunneling Microscope) A microscope that can image down to the atomic level. An STM uses a piezoelectric tube with a tiny sharp tip at the end that is moved within nanometers of the object being sampled. : $22.54), Texas Instruments Incorporated (TXN TXN Texas Instruments (stock symbol) TXN Transaction (databases) TXN Tunxi, China (Airport Code) TXN Tarxien (postal locality, Malta) : $22.93), and Xilinx, Inc. (XLNX: $23.72) with HOLD ratings. Investec's Electronics Research Group employs a food chain approach to coverage of the electronics sector, which spans Semiconductor Capital Equipment, Electronic Design Automation Software, Semiconductor Devices, Electronics Manufacturing Services Electronic manufacturing services (EMS) is term used for companies that design, test, manufacture, distribute and provide return/repair services for electronic component and assemblies for original equipment manufacturers (OEMs). , Embedded Systems, and Consumer Electronics. Investec Inc. makes a market in the shares of: ALTR, ATML, ESST, INTC, LLTC, MCHP, MXIM, NVDA, SNDK, XLNX, and ZRAN. Editor's note: Interviews are available upon request. About Investec Group The Investec Group (JSE JSE See: Johannesburg Stock Exchange Securities Exchange: INT) is an international specialist-banking group which provides a wide range of specialized products and services to a select client base in 15 countries worldwide. The Group is organized in four principal businesses: investment banking, treasury and finance activities, private client activities and asset management. Investec Group employs over 5,000 individuals worldwide. It is one of the Top 25 largest companies listed on the Johannesburg Stock Exchange Johannesburg Stock Exchange (JSE) Established in 1886, the Johannesburg Stock Exchange is the only stock exchange in South Africa. Gold and mining stocks form the majority of shares listed. and ranks among the world's top 350 banks with total assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. exceeding $70 billion. About Investec Inc. Investec Inc. is the United States investment banking arm of Investec Group. The firm is a full service, research-oriented investment bank focusing on companies in the technology, healthcare, and consumer products industries. Investec provides a full range of investment banking services, including public and private equity financings, private placements, mergers and acquisitions, and financial advisory services. Clients also benefit from its wealth management and asset management services. This communication is neither an offer to sell nor a solicitation of an offer to buy any securities mentioned herein. The information contained herein has been obtained from sources that we believe to be reliable, but we do not guarantee its accuracy or completeness. Any opinions expressed herein are statements of our judgment on this date and are subject to change without notice. Investec Inc. and/or its affiliates may have a position in the securities described herein. Available information supporting this recommendation will be furnished upon request. Investec Inc. and/or its affiliates usually make a market in this stock. Investec Inc. and/or its affiliates will sell this stock to or buy it from customers on a principal basis. This report is not directed to, nor intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Investec Inc. or its affiliates to any registration or licensing requirement within such jurisdiction. |
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