Citi remains 'cautious' on semiconductors as February sales top seasonal trends
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Investment firm Citi remained "cautious" on semiconductor stocks on Tuesday even as recent industry data pointed to a potential rebound. 
Analyst Christopher Danely, who reiterated Analog Devices (NASDAQ:ADI) as the firm's top pick given the state of the industry, noted that the 1.8% month-over-month sales increase seen in February was driven by "above-seasonal sales in microcontroller and discrete chips." Semiconductor sales in the month totaled $38.1B, according to data from the Semiconductor Industry Association.
Delving deeper, the industry is still a mixed bag, Danely added, as unit growth was above seasonality but pricing was below seasonality.
Despite the monthly rise in February, Danely still expects semiconductor sales to decline 15% year-over-year, due in large part to weakness in the memory space.
Once the downturn ends, Danely said investors should look to stocks like Micron (MU), ON Semiconductor (ON), GlobalFoundries (GFS) and AMD (AMD) to own.
"Whenever the downturn ends, we prefer stocks with secularly increasing margins and/or EPS such as Micron, ON, GlobalFoundries and AMD as they should offer the most upside potential," Danely added.
Analog Devices (ADI) and AMD (AMD) fell modestly on Tuesday, while GlobalFoundries (GFS), ON Semiconductor (ON) and Micron (MU) dropped slightly more.
Late last month, Analog Devices (ADI) announced it will redeem for cash all of the outstanding 3.450% senior notes due June 15, 2027 issued by its wholly-owned subsidiary Maxim Integrated Products.