Deutsche (DB) Likes INTC, MRVL, ONNN, AVGO in Semi Sector

After Wells Fargo's (NYSE:WFC) recent downgrade of the semiconductor industry, which pushed the share price of a number of companies in the sector lower, Deutsche Bank (NYSE:DB) semiconductor analyst Ross Seymore said today he's reiterating an Equal Weight rating on the sector, and his favorite recommendations are Marvell Technology Group (NASDAQ:MRVL), Intel (NASDAQ:INTC), Avago Technologies (NASDAQ:AVGO) and ON Semiconductor (NASDAQ:ONNN).

Seymore's reasoning was the companies “have already taken inventory adjustments and/or whose valuations do not reflect company-specific growth potential in revenue, margins and EPS.”

He also sees less upside in the sector after a couple of years of outperformance in his view, although he notes the sector has returned to “normal seasonality.”

"On the positive side, comparing the levels of semiconductor inventory in Q4 to the last peak in the semi cycle, Q3 of 2008, Seymore sees “absolute inventory remained unchanged” even though semiconductor sales rose 12% in that time. However, one concern is that Q4′s inventory did rise 7% from Q3 of last year, which suggests “increased vigilance” heading in Q2," said Barron's.