2 chip stocks to avoid in near-term according to analysts at Truist

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2 chip stocks to avoid in near-term according to analysts at Truist

The firm downgraded Microchip stock from Buy to Hold, noting that while the company's fundamentals may have bottomed out, with a significant recovery expected in CY25, its stock is currently trading at a historically high price-to-earnings ratio.

Alongside the downgrade of individual stocks, Truist also shifted its overall view of the semiconductor sector to Neutral from Constructive. “While bullish investors point to a significant recovery in CY25, we highlight that consensus already forecasts a recovery, with CY25 revenue growing 17% y/y and EPS growing 31%,” the note states.They have set a new price target for ADI at $233, down from $266, based on a 28x multiple, which reflects a traditional 7x discount compared to its analog peers.

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