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StockBeat: Xilinx Is a Buy as Trade Risks Baked Into Price, Nomura Says

Published 10/14/2019, 12:50 PM
Updated 10/14/2019, 12:57 PM
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Investing.com – Xilinx (NASDAQ:XLNX) is a buy as it continues to grow despite the rocky ride in the semiconductor industry amid a wave of risks related to the U.S.-China trade war, according to Nomura.

Nomura analyst David Wong upgraded his rating on Xilinx (NASDAQ:XLNX) to 'buy' from 'neutral' and kept his $115 price target on the stock. After rising more than 2% early Monday, Xilinx turned negative, falling 0.2%.

Wong said that while chip stocks will continue to face headwinds, shares of Xilinx, which makes programmable chips known as Field Programmable Gate Arrays, or FPGAs, reflect the cautious outlook in the industry after its recent plunge.

“We believe that many risks remain for U.S. semiconductor companies including uncertainties related to U.S./China trade issues and U.S. action against specific Chinese companies such as Huawei,” Wong wrote in a note to clients. “However, in our view, Xilinx’s stock price and estimates have, in recent months, adjusted to reflect these risks.”

The U.S., however, temporarily lifted the ban on U.S. companies, allowing them to work with Huawei until August. The ban was then extended to November.

The chip company’s continued growth in the face of these headwinds was also cited as a supportive factor.

Xilinx reported June quarter sales growth of 24% year over year and guided 11% growth for the September quarter, despite the Trump administration banning U.S. companies from doing business with Huawei in mid-May, Wong said.

{{0|Xilinx}) is down about 32% since its April peak, but is up about 12% for the year so far, and has an average price target of $122, according to consensus estimates from Investing.com.

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