The semiconductor space saw one of the best days
in a decade in yesterdayâs trading session, with PHLX Semiconductor
Index gaining 5.7% -- its seventh-highest rise in the same time
frame.
The impressive rally was driven by four stocks â Xilinix XLNX,
Teradyne TER, Lam Research LRCX and Texas Instruments TXN â that
has spread huge optimism in the space. Xilinx, which makes
programmable chips for data centers, climbed 18.4% while Lam
Research and Teradyne, which make equipment that manufactures
semiconductors, gained 15.7% and 12.9%, respectively, following
earnings and revenue beat. Texas Instruments was up 6.9% after it
delivered an earnings surprise (read: Chip Stocks See Big Two-Day
Rally After 2015: ETFs in Focus).
However, disappointing outlook from Intel INTC, when it reported
quarterly results after the market close, could pause the rally in
the space. This is especially true as shares of INTC dropped as
much as 8% in aftermarket hours on elevated volume.
Intel Earnings in Focus
Earnings of $1.28 per share came in six cents above the Zacks
Consensus Estimate and improved from the year-ago earnings of
$1.08. Revenues rose 9% year over year to $18.66 billion but were
well below the estimated $19.01 billion. Revenue miss was
attributable to a slowdown in China and sluggish demand for its
data center and modem chips.
The worldâs largest chipmaker expects revenues of $16 billion and
earnings per share of 87 cents for the first quarter. It is much
below the Zacks Consensus Estimate of $17.27 billion for revenues
and $1.01 for earnings per share. For 2019, the company guided
revenues of $71.5 billion and earnings per share of $4.60. The
Zacks Consensus Estimate is currently pegged at $72.98 billion for
revenues and $4.54 for earnings per share. The weak outlook sparks
fears of a chip slowdown.
Intel has a Zacks Rank #3 (Hold) and a VGM Score of A. However, the
stock belongs to the bottom-ranked industry (bottom 34%).
ETFs in Focus
Given Intelâs sluggish guidance, semiconductor ETFs that have
gained in a broad sector rally could decline. These have a large
allocation to the biggest semiconductor company (see: all the
Technology ETFs here).
VanEck Vectors Semiconductor ETF SMH
This fund provides exposure to 25 securities by tracking the MVIS
US Listed Semiconductor 25 Index. Intel occupies the top position
with 13.7% of the assets. The product has managed assets worth
$900.1 million and charges 35 bps in annual fees and expenses. It
is heavily traded with volume of around 7.1 million shares per day
and carries a Zacks ETF Rank #3 (Hold) with a High risk outlook.
SMH was up 5.8% in yesterdayâs session.
iShares PHLX Semiconductor ETF SOXX
This ETF follows the PHLX SOX Semiconductor Sector Index and offers
exposure to 30 U.S. firms, with INTC taking the second spot with
8.3% allocation. The fund has amassed $998.2 million in its asset
base and trades in volume of about 934,000 shares a day. The
product charges a fee of 47 bps a year from investors and has a
Zacks ETF Rank #3, with a High risk outlook. It gained 5.8% in
yesterdayâs session (read: U.S., China to Reach a Trade Deal? ETF
Areas to Gain).
First Trust Nasdaq Semiconductor ETF FTXL
This fund offers exposure to the most-liquid U.S. semiconductor
securities based on volatility, value and growth by tracking the
Nasdaq US Smart Semiconductor Index. Holding 28 stocks in its
basket, Intel is the top firm accounting for 8.9% share. FTXL has
accumulated $18.7 million in AUM and trades in average daily volume
of 13,000 shares. It charges 0.60% in expense ratio and has a Zacks
ETF Rank #3. The ETF surged 6.8% on the day.
Invesco Dynamic Semiconductors ETF PSI
This fund tracks the Dynamic Semiconductor Intellidex Index,
holding 30 securities in the basket. Intel occupies the second
position and makes up for 5.3% share in the basket. PSI has AUM of
$157.3 million and sees average daily volume of about 52,000
shares. It charges 61 bps in annual fees and carries a Zacks ETF
Rank #3 with a High risk outlook. The fund gained 5.3% in yesterday
session.
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Invesco Dynamic
Semiconductors ETF (PSI): ETF Research Reports
iShares PHLX Semiconductor
ETF (SOXX): ETF Research Reports
First Trust NASDAQ
Semiconductor ETF (FTXL): ETF Research Reports
VanEck Vectors
Semiconductor ETF (SMH): ETF Research Reports
Texas Instruments
Incorporated (TXN) : Free Stock Analysis Report
Xilinx, Inc. (XLNX) : Free
Stock Analysis Report
Lam Research Corporation
(LRCX) : Free Stock Analysis Report
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