Wells Fargo bearish on Arrow, Avnet on slowing demand

Arrow Electronics

16/09/2022 13:16

** Brokerage Wells Fargo downgrades electronic components
distributors Arrow Electronics  ARW.N  and Avnet Inc  AVT.O  to
"underweight" from "equal weight" citing slowdown in demand
    ** Shares in ARW down 3.3% at $96.50 premarket; AVT drops
~4% to $38.70, on course for fourth straight day of losses
    ** Brokerage says strong component demand, shortages and
price increases have resulted in distributors over-earning, and
with demand now weakening, it will add to downward pressure on
profits
    ** With both ARW and AVT forecasting sequential revenue
declines in the Sept. quarter, believe near-term results have
likely peaked and set up for a cycle correction - Wells Fargo
    ** Adds it expects an 8%-10% decline in semiconductor sales,
excluding memory chips, in 2023
    ** Both ARW and AVT have a consensus rating of "hold" on
Refinitiv; ARW has a median PT of $130.50, while AVT has median
PT of $47.50 - Refinitiv data
    ** Up to Thursday's close, ARW down ~26% YTD while AVT had
lost ~3% 

 (Reporting by Deborah Sophia in Bengaluru)
 ((DeborahMary.Sophia@thomsonreuters.com;))