JPM sees modest growth for telecoms equipment, challenges in semis and payments
09/12/2024 08:55
** J.P.Morgan expects modest growth for the telecom
equipment sector and challenges for semiconductors and payments
in 2025 with a few potential exceptions
** JPM says telecom equipment makers have potential to beat
earnings estimates in 2025, as U.S. telcos stabilise their
inventories and India invests in 5G
** Nokia NOKIA.HE might stand out from its non-telecoms
businesses, JPM says, and upgrades it to "overweight" saying it
is undervalued compared to earnings, unlike its peer Ericsson
ERICb.ST ("neutral")
** JPM says orders of computer equipment makers like ASML
ASML.AS or ASM International ASMI.AS (both "overweight")
will remain weak until the H2 of 2025, after chipmakers like
Intel INTC.O cut spending this year
** It selects ASMI as its top pick, and says the ASML stock
may not perform until Intel's next CEO makes a decision over
implementation of its top of the line High NA tool
** With increased inventories, JPM recommends avoiding
automotive exposed chipmakers like Infineon IFXGn.DE (N) and
STMicroelectronics STMPA.PA , which it downgrades to "neutral"
** Instead, it prefers less exposed manufacturers like
Nordic Semiconductor NOD.OL ("overweight") or Soitec SOIT.PA
("neutral")
** It also sees the payments sector struggling with slower
growth and debt refinancing, but puts Adyen ADYEN.AS
("overweight") on a positive watch for short-term gains due to
its potential to beat earnings expectations
RATING CHANGES:
COMPANY RATING OLD RATING
Nokia overweight neutral
STMicroelectronics neutral overweight
(Reporting by Vera Dvorakova and Nathan Vifflin)
((vera.dvorakova@thomsonreuters.com,
nathan.vifflin@thomsonreuters.com))