Shares of semiconductor company, SanDisk (NASDAQ: SNDK) crumbled earlier this week after cutting guidance for the current quarter.
It was a double-digit drop that now has the stock down nearly 20% in just a few sessions of trading.
Drexel Hamilton downgraded the stock to Hold from Buy, but Susquehanna Financial Group reiterated its Positive rating on SanDisk while lowering its price target from $120 to $112 per share.
Drexel’s downgrade also included a price target change from $90 to $40 per share.
That is a pretty wide divergence in opinion that signifies much uncertainty.
The question for investors going forward is whether or not the action in SanDisk is an isolated event.
Considering the glowing reports regarding Apple (NASDAQ: AAPL) and sales of its products, any weakness in the semiconductor space due to the SanDisk reduction in expectations could be viewed as a buying opportunity.
On the heels of the recently completed Consumer Electronics Show or CES, Deutsche Bank put out a special report highlighting semiconductor stocks that would benefit from the consumer trends in technology.
Whether or not the report is a gloss piece hoping to drum up business for Deutsche Bank can be debated at another time.
Taking it at its face, ignoring the short-term market issues very present today, there very well may be some unique opportunities in the semiconductor space.
Chip behemoth and bellwether stock Intel (NASDAQ: INTC) has further upside according to Deutsche Bank.
The company reports earnings results for the fourth quarter on Thursday after the market closes. To the extent that report is negative, investors might want to wait until after the news to establish a position in Intel.
Deutsche Bank has a $40 target on Intel based on the stabilization of the PC business and improved profitability in mobile.
In addition, Intel pays a healthy dividend and has a strong stock buyback program in place that should help to support shares in the long run.
The chip stock with the most upside is ON Semiconductor (NASDAQ: ONNN).
Deutsche bank approves of ON’s recent acquisition of Truesense Imaging, stating that the deal adds to its current portfolio of imaging offerings and adds some 200 new customers.
The target for ON is $12 per share more than 20% above current prices.
That said, this lower priced stock with a mid- to small-cap valuation can be quite volatile. To the extent the market remains in a bearish state, ON shares might be vulnerable to a pullback.
That’s in the short term.
Longer term, ON Semiconductor would appear to offer market-beating performance to the upside in a continuation of the current bull market.
Playing on the smart phone and personal computing device trend is Broadcom (NASDAQ: BRCM).
The company is a top supplier to both Apple and Samsung and thus uniquely positioned for further growth as both of these companies accelerate sales of devices.
Deutsche Bank has a $50 target on Broadcom.
At the moment, stocks are in a volatile downward phase bringing many of these stocks lower.
When the dust clears may very well be a good time to get involved in these favored stocks of Deutsche Bank.