Category Archives: oud
Rumored Xilinx Bidder Qualcomm Better Off Buying Apple Supplier NXP
Xilinx ( XLNX ) stock rocketed near the close Tuesday on a rumored $15 billion takeout offer, but Cowen analyst Timothy Arcuri says Apple ( AAPL ) supplier Qualcomm ( QCOM ) — often cited as a potential Xilinx buyer — would be better off targeting NXP Semiconductors ( NXPI ). Street Insider first reported the rumor of the offer, citing sources familiar with the matter, but didn’t identify the bidder. Xilinx stock shot up 5.7% near the close Tuesday and was up a fraction in after-hours trading. Arcuri retained his outperform rating and 60 price target on Qualcomm stock. Earlier Tuesday, MKM analyst Ian Ing reiterated his view that Broadcom ( AVGO ) and Qualcomm are potential Xilinx suitors. But Arcuri says Xilinx wouldn’t “move the needle” for Qualcomm, which may not be completely committed to the data center path. Xilinx’s field programmable gate array (FPGA) chips are ideal for data center acceleration, Ing wrote in a research report. “In some ways, Xilinx would clearly accelerate Qualcomm’s data center initiatives, but we wouldn’t view a Qualcomm/Xilinx deal all that favorably for Qualcomm and would much rather see it buy an asset like NXP,” Arcuri wrote in a research report. “This would simply be a huge amount of money to spend for a deal that isn’t transformational.” Acquiring NXP would allow Qualcomm to tap into offshore cash, which wouldn’t be possible in the case of Xilinx, Arcuri noted. And as Xilinx suits up for a FPGA battle against Intel ( INTC ), it’s planning on spending a lot of dough. “If we were Qualcomm, this factor argues it is better off to wait,” he wrote. Still, Xilinx is the singular merchant FPGA player following Intel’s $16.7 billion acquisition of rival Altera late last year, William Blair analyst Anil Doradla noted earlier Tuesday. The rumored takeout bid follows Xilinx’s late Monday analyst day. But Doradla wasn’t too impressed, saying the event “lacked confidence.” Xilinx is focusing on cloud computing, embedded vision, industrial Internet of Things and 5G markets rather than its bread-and-butter wireless and wireline markets.
Video Game Makers, Insurers And Web Stocks Garner Strength
Several industry groups in IBD’s database have been outperforming in recent weeks. Here’s a look at some of top performers over the past four weeks. The Computer Software-Gaming group ranks in the bottom half of IBD’s 197 industry group rankings, but it’s been the top performer in the past four weeks, up about 10%. China-based NetEase ( NTES ) has been in rally mode as it works on the right side of a cup-shaped base. With a three-year annualized earnings growth rate of 26% and sales growth rate of 44%, the company is no stranger to strong growth, thanks to a booming Internet population in China. Headline flow has been busy around NetEase recently. This week, it inked a deal with Microsoft to distribute Microsoft’s hugely popular “Minecraft” video game in China. It’s also making a virtual reality game for DayDream, Google’s new VR platform. Meanwhile, group peer Electronic Arts ( EA ) is holding gains smartly after a bullish gap-up May 11, fueled by strong earnings. Results have been uneven in recent quarters, but in the latest quarter, earnings per share rose 28% from the year-earlier period. Sales rose 10% to $1.3 billion. Soon after its earnings report, Electronic Arts laid out a plan to add $1 billion in incremental revenue within the next three to five years. It sees future growth coming from action games, shooter games, e-sports and international expansion. After a bullish move during the week ended May 13, EA’s weekly chart shows a new handle entry at 77.25. Meanwhile, IBD’s Insurance-Brokers group and Retail-Internet are up close to 7% each. Among brokers, Brown & Brown ( BRO ) is moving sideways and trading tightly near its 10-week moving average. It’s working on a new flat base with a 36.13 buy point. Arthur J. Gallagher ( AJG ) has risen to the top of a long consolidation. Headed into this week, it showed 15 weekly price gains in the past 16 weeks. Another liquid name in the group, U.K.-based Willis Towers Watson ( WLTW ), is near highs and still in buy range from a 124.66 cup-with-handle entry. In the Retail-Internet group, China-based Alibaba ( BABA ) is getting its house in order as it vies for a breakout over an 81.88 buy point. The stock outperformed Tuesday, rising nearly 3% to 81.12. Group peer Amazon ( AMZN ) has proven itself an institutional-quality name and is acting well after a recent breakout. It’s extended now, but watch for a three-weeks-tight pattern by the end of the week. The pattern is a sign of strength and occurs when the stock closes within 1.5% of the prior week’s close. A breakout from a three-weeks-tight pattern is best used to add to a current position, although it can be used to start a small position. Finally, stocks in the recreational-vehicle group, from RV makers to component makers, continue to show relative strength. The group is up around 6% over the past four weeks. Group leader Thor Industries ( THO ) is firming up at its 10-week moving average as it tries to clear a long consolidation. A comprehensive overview of the group appeared in the latest IBD Weekly weekend edition.