Shares of Micron Technology Inc climbed as much as 11 percent after Barclays Capital raised the chip devices maker's stock to "overweight," even as the brokerage downgraded five other stocks from the sector, including Intel Corp.
Barclays said it expects Micron to benefit from higher pricing of Dynamic Random Access Memory (DRAM) and stronger PC sales, likely from the second half of the year. Shares of the company, which was valued at $6.2 billion, were trading up 9 percent at $6.88 around midday on Nasdaq after touching a high of $6.96 in morning trade.
Barclays lowered its ratings on Intel, Applied Materials Inc, Freescale Semiconductor Holdings Ltd, Microchip Technology Inc and Spansion Inc to "equal weight" from "overweight."
The brokerage, however, left its rating for the U.S. semiconductor capital equipment sector unchanged at "neutral."
Barclays also retained its "positive" rating on the U.S. semiconductor sector, and said it expects semiconductor stocks to outperform end markets in the second half of 2012 and to grow at 6 to 8 percent in 2013.
"First quarter should be the trough for semis given the ongoing inventory correction, coupled with supply chain constraints, due to muted end demand visibility," Barclays analyst C.J. Muse wrote in a note to clients.
Muse now expects U.S. semiconductor revenue growth to come in flat to 4 percent in 2012. He had earlier forecast growth of 2 to 5 percent.
According to Thomson Reuters' Starmine data, Muse is a four star-rated analyst for the accuracy of his earnings estimates on the companies under his coverage universe, which include Intel and Applied Materials.
The Philadelphia semiconductor index fell 12 percent since the start of 2011 to end the year at 364.44 points, as the industry was hit by disruptions in supply chains with the earthquake and tsunami in Japan and flooding in Thailand. (Reporting by Rachel Chitra and Ashutosh Pandey in Bangalore; Editing by Tenzin Pema and Joyjeet Das)