Microsemi (MSCC) (ORCC) (SEIC) (SLXP) (SMG) Ratings Reiterated

Microsemi Corporation (NASDAQ: MSCC), Online Resources Corp. (NASDAQ: ORCC), SEI Investments Company (NASDAQ: SEIC), Salix Pharmaceuticals, Ltd. (NASDAQ: SLXP) and Scotts Miracle-Gro (NYSE: SMG) had ratings on them reiterated by analysts.

Oppenheimer reiterated its “Outperform” rating on Microsemi Corporation (MSCC). They have a price target of $28.00 on the company.

Oppenheimer reiterated its “Market Perform” rating on Online Resources Corp. (ORCC).

Oppenheimer reiterated its “Market Perform” rating on SEI Investments Company (SEIC).

Brean Murray reiterated its “Buy” rating on Salix Pharmaceuticals, Ltd. (SLXP). They have a price target of $50.00 on the company.

Oppenheimer reiterated its “Market Perform” rating on Scotts Miracle-Gro (SMG).

Microsoft (MSFT), Adobe (ADBE), Cisco (CSCO), eBay (EBAY) Make Ethics List, Surprising Who Doesn't

Microsoft (NASDAQ:MSFT), Adobe (NASDAQ:ADBE), Cisco (CSCO) and eBay (NASDAQ:EBAY) all made a list of most ethical companies in the world, as compiled by the Ethisphere Institute, while tech giants Apple (NASDAQ:AAPL), Facebook and Google (NASDAQ:GOOG) didn't make the cut this time around.

Of the approximate 3,000 or more companies that apply to be on the list, only 110 make it.

Criteria for the list includes nominations from peers, sustainable business practices, and the history of a company for regulatory infractions.

If a company has had any major legal problems over the last five-year period, they are automatically disqualified, which speaks to some of the techs being investigated in Europe over antitrust violations.

EBay closed Wednesday at $29.73, falling $0.71, or 2.33 percent. Cisco closed at $17.05, dropping $0.34, or 1.96 percent. Adobe closed at $32.09, down $0.95, or 2.88 percent. Microsoft closed at $24.79, falling $0.60, or 2.36 percent.

Wells (WFC) Top Semi Picks are Intel (INTC), Qualcomm (QCOM), Linear Technology (LLTC), Analog Devices (ADI), Xilinx (XLNX), Altera (ALTR)

Even though Wells Fargo (NYSE:WFC) chip analyst David Wong downgraded his outlook on semiconductor stocks from "Overweight," he still likes Intel (INTC), Qualcomm (QCOM), Linear Technology (LLTC), Analog Devices (ADI), Xilinx (XLNX) and Altera (ALTR) in the sector.

Wong said, “We continue to expect solid semiconductor industry growth in 2011, of 10-15%, with many chip companies maintaining the high levels of profitability demonstrated in 2010.”

“The trend for worldwide semiconductor sales continues to track roughly in line with to somewhat above our expectations,” added Wong, who also said inventory levels are "appropriate" at this time.

Wong considers less desirable Broadcom (BRCM), Advanced Micro Devices (AMD), Microsemi (MSCC) and Micron Technology (MU), citing high valuations, low profit and company-specific risk.

Wong maintains Market Perform ratings on Maxim (MXIM), Texas Instruments (TXN) and National Semiconductor (NSM).

Microsemi's (NASDAQ:MSCC) GAAP Operating Margins Remain Low, EPS Slashed by Wells Fargo (NYSE:WFC)

Microsemi Corporation (NASDAQ:MSCC) had their EPS estimate slashed by Wells Fargo (NYSE:WFC) on low GAAP operating margins, and were also downgraded by the giant bank.

Wells says, "Microsemi's high reliability business has, in
our view, good long term visibility as a result of the relative stability of the defense, satellite and medical markets. The company also has substantial breadth of commercial markets. Microsemi has established a good track record of integrating acquisitions, consolidated manufacturing operations and reducing costs. However, GAAP operating margins remain relatively low...For FY2011, we decreased our EPS estimate to $0.51 from $0.74 per share and we similarly decreased our FY2012 EPS estimate to $0.99 from $1.27."

Wells Fargo downgraded Microsemi Corporation (MSCC) from
"Outperform" to "Market Perform." Microsemi closed Friday at $22.35, losing $1.33, or 5.62 percent. Wells has a valuation range of $22-$27 on MSCC.

Linear Technology (NASDAQ:LLTC) Too Pricey in Short Term

Linear Technology (NASDAQ:LLTC) has done a good job in sustaining their margins, but there are few, if any, catalysts in the short term to make them attractive to FBR.

FBR says, "Some bulls may point to long-term growth opportunities in industrial, automotive, and comm/networking, and industry-high margins. Bears may argue that the firm is already well run with few operational improvement initiatives, that margins are near a peak, and that the firm walks away from too much business (Apple (Nasdaq:AAPL), among others) so the firm may keep its margin structure intact. We find ourselves somewhere in the middle, apathetic on the stock given that Linear is not very inexpensive nor very growthy, and given our view that other chip stocks offer more upside returns (ON Semi (Nasdaq:ONNN), Maxim (Nasdaq:MXIM), Fairchild Semi (NYSE:FCS), Microsemi (Nasdaq:MSCC), Marvell (Nasdaq:MRVL)). We agree that further gross margin expansion opportunities are limited, with some Apple unwind a headwind in calendars 1Q11 and 2Q11. We thus prefer less-expensive chip stocks, product-cycle stocks, or fab-consolidation stocks. (FY11 EPS estimate lowered from $2.50 to $2.45)"

FBR Capital reiterates an "Underperform" rating on Linear Technology (LLTC), which was trading at $34.66, down $1.47, or 4.07 percent, as of 11:14 AM EST. FBR dropped their price target on Linear from $35 to $34.

Maxim (Nasdaq:MXIM), Marvell (Nasdaq:MRVL), ONNN (Nasdaq:ONNN), National Semi (NYSE:NSM), Fairchild (NYSE:FCS), Int'l Rectifier (NYSE:IRF), Microsemi (Nasdaq:MSCC), Broadcom (Nasdaq:BRCM) Have Most Semi Upside

With earnings reports from a number of semiconductor companies to be released next week, FBR focused on a number of companies in the sector, saying Maxim (Nasdaq:MXIM), Marvell (Nasdaq:MRVL), ON Semiconductor (Nasdaq:ONNN), National Semi (NYSE:NSM), Fairchild (NYSE:FCS), Int'l Rectifier (NYSE:IRF), Microsemi (Nasdaq:MSCC) and Broadcom (Nasdaq:BRCM) have the most upside potential of the group.

FBR says, "Several chip firms report earnings over the next week, including Linear Technology (Nasdaq:LLTC)(UP) Tuesday AMC, Fairchild Semi (FCS)(OP), Thursday BMO, Maxim Integrated (MXIM)(OP) Thursday AMC, AMD (NYSE: AMD)(MP) Thursday AMC, and Texas Instruments (NYSE: TXN)(OP) Monday AMC. For near-term focused investors, we think FCS and MXIM could see solid share price appreciation following beat and raise results, with TXN also possibly in that camp (though our conviction is slightly lower). While both MXIM and FCS have appreciated meaningfully in the near term, robust results and still-attractive stock valuations keep us favorable near term. For AMD, while the firm could post solid 1Q11 guidance, the departure of former CEO Dirk Meyer is likely to weigh on the stock and overshadow any near-term results until a full-time successor is found. For Linear, we think the firm's core business remains solid; however, several headwinds are present in the March quarter, including (1) a possible loss of one of its two iPad sockets (we estimate content going from $2 to $1) and some iPad seasonality in March, driving a roughly $10M revenue headwind in total (three revenue points), and (2) tougher comparisons against the firm's 14-week December quarter (about four revenue points). For Texas Instruments, we think the firm will report robust results and guidance, and the stock could possibly rally, though we prefer MXIM (growth) or NSM (value) versus TXN currently. Finally, for ON Semi (ONNN–OP), we are raising our 4Q10 revenue and EPS estimates slightly toward the high end of guidance, embedding Sanyo into our financial estimates, and raising our price target from $15 to $16."

"While the group could see some profit-taking following such a move higher, we do expect some beat and raise 4Q10 results and thus think any sell-off will be short term in nature and a likely buying opportunity for later in 2011. Our favorite stocks for upside include Maxim (Nasdaq: MXIM), Marvell (MRVL), ONNN, National Semi (NSM), Fairchild (FCS), Int'l Rectifier (IRF), Microsemi (MSCC), and Broadcom (BRCM)."

Maxim (Nasdaq:MXIM), ON Semi (Nasdaq:ONNN), Marvell (Nasdaq:MRVL), Broadcom (Nasdaq:BRCM), National (NYSE:NSM), Fairchild (NYSE:FCS), Intl Rectifier (NYSE:IRF), Microsemi (Nasdaq:MSCC) Have Best Potential Upside Says FBR

Commenting on the semiconductor sector, FBR said the companies with the most potential upside in their view are Maxim (Nasdaq:MXIM), ON Semi (Nasdaq:ONNN), Marvell (Nasdaq:MRVL), Broadcom (Nasdaq:BRCM), National (NYSE:NSM), Fairchild (NYSE:FCS), Intl Rectifier (NYSE:IRF) and Microsemi (Nasdaq:MSCC)

FBR said, "Here we discuss Maxim Integrated (Nasdaq: MXIM)(Outperform) and our latest 1Q11 production start checks. Regarding Maxim, the firm has seen meaningful success ramping analog baseband chips into CDMA phones from Samsung and LG, phones usually powered by Qualcomm baseband chips. With Apple's new CDMA-based iPhone about to launch, we cannot help but wonder if the innards of this device are similar to the innards of other CDMA-based handsets that often contain Maxim analog baseband chips. While we have not confirmed anything in this regard, it is possible Maxim's chips could be found inside the CDMA-based iPhone, instead of the power management unit currently designed in from Dialog. If 20M CDMA-based iPhones are built in 2011 with an analog baseband content of $2, then $40M of incremental revenues would be generated, contributing about $0.04 of annual EPS, a positive. Separately, we detail our updated production start checks, which were largely stable versus our prior month checks in aggregate, with production forecast improvements by Nvidia (Nasdaq: NVDA), Marvell (Nasdaq: MRVL), and Broadcom (Nasdaq: BRCM) largely offsetting production forecast cuts from Qualcomm (Nasdaq: QCOM), Texas Instruments (NYSE: TXN), Altera (Nasdaq: ALTR), and Atheros (Nasdaq: ATHR). Regarding chip stocks, while playing some defense may make sense following a big run higher since Labor Day, and given that CES has historically marked a peak in both chip stock prices and sentiment, we do think a "beat and raise" round of 4Q earnings results, improving economic (jobs and manufacturing) data, an inflow of cash from bonds to equities, and still-reasonable chip firm valuations (14x 2011 P/E for sector) may mean that any sell-off is short term in nature and a likely buying opportunity. Chip stocks remain cheap compared with software stocks, and compared with the overall market, especially in light of robust demand trends and structural growth opportunities. We think the SOX can grind higher toward 475–500 by year-end 2011. Stocks to focus on for potential upside include Maxim (Nasdaq: MXIM), ON Semi (Nasdaq: ONNN), MRVL, BRCM, National Semi (NYSE: NSM), Fairchild Semi (NYSE: FCS), Intl Rectifier (NYSE: IRF), and Microsemi (Nasdaq: MSCC)."

FBR added these points: 1) Maxim could win a power management socket in the new CDMA-based iPhone (though nothing is confirmed); possible $0.04 annual EPS impact; 2) 1Q production start checks largely stable and better than seasonal at flat QOQ; raises by NVDA, MRVL, and BRCM offset by cuts from QCOM, TXN, ALTR, and ATHR; 3) Commentary for firms that increased production forecasts; 4) Commentary for firms that decreased production forecasts; 5) Shares of Intel (Nasdaq: INTC) widely disliked—a potential opportunity, if Sandybridge ramp is robust.

Microsemi Corporation (NASDAQ:MSCC) Offers More Stability than Peers Says Needham

Needham & Company continues to like Microsemi Corporation (NASDAQ:MSCC), saying they offer more stability than their peers in the sector.

Needham said, "As a diversified supplier of high reliability and analog/mixed-signal semiconductors into the defense, satellite, aerospace, industrial and communications markets, we believe Microsemi offers investors greater stability in revenue, earnings and cash flow than its peers and that its shares remain undervalued...We are maintaining our FY11 and FY12 revenue and non-GAAP EPS estimates of $815MM/$1.80 and $915MM/$2.30, respectively."

Needham & Company maintains a "Strong Buy" on Microsemi Corporation, which closed Monday at $22.74, down $0.07, or 0.31 percent. Needham raised their price target from $30 to $35.

QUALCOMM (Nasdaq:QCOM), Broadcom (Nasdaq:BRCM), Atheros (Nasdaq:ATHR), LSI (NYSE:LSI), National Semi (NYSE:NSM), ON Semi (Nasdaq:ONNN), Fairchild (NYSE:FCS) Look Good Going into 2011

FBR Capital gave their outlook for the chip sector going into 2011, and still see it performing strongly, although probably less than the last several quarters. Favorites in the sector include QUALCOMM (Nasdaq:QCOM), Broadcom (Nasdaq:BRCM), Atheros (Nasdaq:ATHR), LSI (NYSE:LSI), National Semiconductor (NYSE:NSM), ON Semi (Nasdaq:ONNN), Fairchild (NYSE:FCS) and Microsemi (Nasdaq:MSCC), all of which have an "Outperform" rating on them from FBR.

FBR said, "We remain constructive on the chip sector for 2011 and think that semiconductor stocks can appreciate higher over the course of the year given (1) robust end demand for smartphones, tablets, infrastructure equipment, and industrial/automotive applications; (2) higher chip content per device in handsets, automobiles, and others; (3) still-reasonable channel inventories; (4) still-limited capacity growth, and (5) reasonably high earnings power. That said, chip stocks have had a powerful move higher since September, and thus could be subject to profit taking, a pullback, or at the very least some digesting to start the year. Indeed, 2010 saw a continuation of the substantial recovery that began in 2H09, and we see these positive demand trends continuing into 2011. While the chip cycle did "over-heat" some in 2010, likely driving 2011 semiconductor revenue growth to track flattish year over year given the 5–10 points of revenue replenishment good news that does not repeat in 2011, we still believe this is the sector's first ever "soft-landing." We do see some revenue- and EPS-related "ship-ahead" risks still for chip firms, particularly in the industrial and communications/networking sectors, and expect some misses from chip firms in these sectors in 1H11, though the magnitude of these resets should be modest. Valuations remain generally attractive for the group (though not as attractive as two to three quarters ago) and we see material upside in Outperform-rated stocks like QUALCOMM, Broadcom, Atheros, LSI, National Semi, ON Semi, Fairchild, and Microsemi."

QUALCOMM closed Tuesday at $49.18, up $0.06, or 0.13 percent. Broadcom closed at $44.98, down $0.72, or 1.58 percent. Atheros closed at $33.94, down $0.62, or 1.79 percent. LSI ended the day at $5.93, up $0.02, or 0.34 percent. National Semiconductor closed at $13.64, up $0.06, or 0.44 percent. Fairchild ended the session at $15.14, down $0.33, or 2.13 percent. Microsemi closed Tuesday at $23.59, down $0.71, or 2.92 percent.