By Sam Boughedda
A Stifel analyst initiated coverage on a number of chipmakers, including NVIDIA (NASDAQ:NVDA) and Intel (NASDAQ:INTC) on Thursday.
The analyst initiated coverage of the stocks with Hold ratings. Cadence Design Systems (NASDAQ:CDNS) price target was set at $200, Synopsys (NASDAQ:SNPS) at $445, Nvidia at $165, Intel at $32, and Lattice Semiconductor (NASDAQ:LSCC) at $60.
On Cadence and Synopsys, the analyst stated: "Non-traditional semiconductor companies have increasingly embraced captive semiconductor design. These dynamics have driven much faster than historical revenue growth and profitability for both CDNS and SNPS in recent years. We expect this trend to continue as leading edge semiconductor design activity increasingly encounters physical limitations and rapidly increasing costs."
Regarding Nvidia, the analyst explained: "NVDA has leveraged its GPU expertise to pioneer novel approaches to accelerated computing challenges and, today, has established a broad portfolio of GPUs, DPUs, interconnect technologies, software and platform level solutions that the management team believes can grow into $1 trillion in available market opportunities. We are bullish on the company's longer-term opportunities across its target end market segments, but the lack of visibility into the timing and magnitude of revenue re-acceleration, particularly relative to NVDA's Gaming segment, is likely to limit share price upside, in our view."
In his note on Lattice Semiconductor Corp., the analyst explained that as LSCC prepares to enter the mid-range FPGA market later this year, management expects the company's longer-term market opportunity to double from $3 billion to $6 billion. "While we view LSCC's recent execution and forward-looking strategy positively, we believe that current valuation multiples (27x our 2023EPS estimate and 10x our 2023 sales estimate) reflect strong medium-term prospects."
Finally, speaking on Intel, the analyst wrote: As INTC begins its multi-year transition strategy, we view management's timeline and technology road map targets as ambitious, and we expect competitive pressures to continue to increase."
"Despite the recent underperformance, INTC shares are trading roughly in line with the company's 10-year average on a forward P/E basis at approximately 12x. We do not see catalysts towards multiple expansion until investors gain visibility into the timing and magnitude of returns on the current investment cycle."