The 2014 All-America Research Team: Semiconductors, No. 2: John Pitzer

< The 2014 All-America Research TeamJohn PitzerCredit SuisseFirst-place appearances: 1

Total appearances: 5

Team debut: 2010Climbing one position on this roster to No. 2 is Credit Suisse analyst John Pitzer, who also earns second-place honors in Semiconductor Capital Equipment this year. Pitzer “filters out the noise and consistently focuses on what is important and impactful,” one portfolio manager reports. With 24 U.S. semiconductors names under coverage, the analyst advises investors to focus on subsectors of the wider group and individual stocks. “We are in the second full year of the semiconductor upturn,” he explains. “Second-derivative metrics — that is, year-over-year unit growth and earnings revisions — are decelerating, and that has historically been a period during which semi stocks are more market performers than outperformers.” Pitzer notes, however, that “structural factors, including consolidation, high barriers to entry, and improving and more consistent free cash flow, have continued to allow semis to outperform the broader market.” Indeed, year to date through mid-September, the Philadelphia Stock Exchange Semiconductor Sector Index advanced 18.2 percent, against the broad market’s 7.3 percent rise. He recommends favoring memory stocks, such as Micron Technology of Boise, Idaho, believing that the market is “fundamentally undermodeling a secular shift in demand from consumer to the enterprise, which should allow for better pricing trends even in the face of rising [capital expenditures],” the analyst explains. His target price for Micron Technology’s stock is $50, well above the $30.02 price the shares attracted in mid-September.

Related