Morgan Stanley Ups Chartered Semi to 'Overweight'

Analyst Sunil Gupta says the chipmaker's improved product mix should lead to stronger selling prices

Morgan Stanley upgraded Chartered Semiconductor (CHRT ) to overweight from equal-weight.

The chipmaker raised its first-quarter outlook. Analyst Sunil Gupta says he expects Chartered Semiconductor to improve its blended average selling prices due to more "first source" business, an improving technology process mix, a better product mix, and a customer seasoning similar to its success at Fab 5.

He believes worries about Semiconductor Manufacturing International Corp. eating into Chartered Semi's business as well its investors' capital, along with worries about a possible equity offering from Chartered Semi have resulted in underperformance year to date. Gupta thinks these concerns are exaggerated, and provides an attractive entry point. Gupta sees 1 cent 2004 earnings per share, and 6 cents in 2005.

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