Investment house Rodman & Renshaw has initiated coverage of TowerJazz (Nasdaq: TSEM; TASE: TSEM) with a "Market Outperform/Aggressive Risk" rating, and a $2 per share target price.
TowerJazz shares closed on Friday at $1.32.
Rodman & Renshaw analyst Ashok Kumar said that the semiconductor industry Is at the beginning of an upturn and expect growth rates to normalize after the inventory led rebound in 2010. In line with the industry's growth, Kumar sees chip foundries, such as TowerJazz, on a path to sustained recovery. The analyst cites research firm Gartner, saying "foundry revenues are expected to reach $29.6 billion in 2013.
Kumar says that TowerJazz recorded close to 234 design wins in the first half of 2010 (compared to 308 for all of 2009) with TowerJazz now operating at nearly full capacity. The company will increase throughput to about 900,000 wafers annually over the next year, up from its current 700,000 wafers annually.
Another firm, Miller Tabak Roberts Securities LLC, sees a soft landing in 2011 for semiconductor industry revenue growth. However its analysts say TowerJazz has enough liquidity to pay off maturing convertible debt in 2011, and then they see outsourcing trends and TowerJazz's design wins generating sustainable growth.
Published by Globes [online], Israel business news - www.globes-online.com - on September 12, 2010
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