Qualcomm, KLA Corp, Texas Instruments fall as Morgan Stanley cuts PTs
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Qualcomm (NASDAQ:QCOM), Kla Corp. (NASDAQ:KLAC), Texas Instruments (NASDAQ:TXN) and a number of other semiconductor companies saw their price targets cut at Morgan Stanley, ahead of earnings season, with the firm noting strength in analog and [semiconductor capital equipment] markets and weakness in vertical markets.
A team of analysts, led by Joseph Moore, lowered the price targets on Sensata Technologies (ST) to $64 from $71, Te Connectivity (TEL) to $151 from $167 and Amphenol (APH) to $79 from $84. He also trimmed the targets on KLA Corp. (KLAC) to $375 from $400, Silicon Laboraotires (SLAB) to $156 from $208, Texas Instruments (TXN) to $181 from $198 and Qualcomm (QCOM) to $167 from $223.
Qualcomm (QCOM) shares fell more than 1% to $131.25, while KLA Corp. (KLAC) fell more than 1.5% to $319 in premarket trading on Monday.
Texas Instruments (TXN) shares fell nearly 1% to $171.64 in premarket trading.
Scheduled to report Tuesday after the market closes, Moore said that Texas Instruments (TXN) may offer cautious results, even if the analog space is still "quite strong."
"Expectations are high coming into the print and while we expect another beat and raise quarter, we believe that the stock is already discounting a good outcome," Moore wrote, adding that Texas Instruments and other analog names may "underperform."
"Despite the idiosyncratic headwinds that TI is facing, we believe that the strong pricing environment and robust demand across the broad-based end markets, particularly automotive and industrial, are likely to offset any weakness elsewhere," Moore continued.
Concerning KLA Corp. (KLAC), which the firm rates as equal weight, a "solid" quarter is expected, though there should be less impact from its supply chain than Lam Research (LRCX) saw in its most recent earnings.
"The overall wafer fab equipment market remains strong, as despite investor concerns customers still see a persistent shortage of wafer fab production in logic and foundry," Moore explained, adding that the supply chain is still "meaningfully constrained" due to a number of component shortages, which has weighed on shorter-term numbers. 
Qualcomm (QCOM) may see some headwinds over the next one or two quarters as revenue from royalties and radio frequency come in lighter-than-expected, even as handset, automotive and internet of things revenue are at the high-end of expectations. 
"From a handset perspective, Qualcomm had been a significant bottleneck as recently as [fourth-quarter], given tight supply of baseband/apps processor combos, and even with incremental softness from China customers, we think that there is still enough catch-up with other customers to drive solid [first-half] numbers," Moore wrote.
For the rest of the year, the analyst added that it's important that handset volumes recover, notably in China, which has been impacted by COVID-related lockdowns. 
Last week, Mizuho cut the price target on several semiconductor stocks, including. Qualcomm (QCOM), citing multiple headwinds, including weak 5G demand.