Bear Stearns Ups Fairchild Semiconductor to 'Outperform'

Analyst Brian Wu thinks supply constraints could lead to firming prices and strong earnings growth

Bear Stearns upgraded Fairchild Semiconductor (FCS ) to outperform from peer perform.

Analyst Brian Wu says the chipmaker could begin to see a shortages in power discrete components for power metal-oxide semiconductor field-effect transistors (MOSFETs), which comprise 35% to 40% of Fairchild's revenues. He believes supply constraints could lead to firming prices and strong earnings per share growth.

Wu pegs industry MOSFET utilization rate at 90%; he sees strong unit growth for the next few years, exceeding capacity growth. He's seen stronger demand for MOSFETs with specific package types, and says pricing has been stable for several quarters. Wu sees 14 cents 2003 earnings per share, and raised the 43 cents 2004 estimate to 60 cents. He has a $21 yearend target.

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