Altera Shares Hit New High

Shares of Altera Corp. (NASDAQ: ALTR) touched a new 52-week high of $45 on Friday. The compay said March 1 that it still predicts first quarter sales to decline 1 percent to 5 percent sequentially.

The San Jose, California-based chipmaker said it still believes that the Industrial Automation, Military & Automotive vertical market will be up sequentially in the first quarter, while sales in other vertical markets will be flat to down. Altera will announce its quarterly results on April 26.

Robert W. Baird upgraded its rating on shares of Altera on Friday to outperform from neutral and increased its price target to $53 from $48. The brokerage expects PC and wireless infrastructure trends to rebound in the second half of 2011.

Our research suggests continued growth in manufacturing build plans for Altera sequentially in both first quarter and second quarter. While we believe inventories at Huawei and ZTE are high, with component orders tracking slightly below expectations in first quarter, we expect inventory normalization by late second quarter followed by a second-half rebound, said Tristan Gerra, an analyst at Robert W. Baird.

Gerra said its recent field research points to a continued rebound in order trends for semiconductors, resilient lead times, lean inventories, and a favorable pricing environment, which should lead gross margins to continue tracking at above-historical levels.

Gerra said steady lead times, notably for commodity components, remain well above average, suggesting no serious inventory correction is likely in the near term. Ongoing concerns about inflation and higher raw material prices could lead to some inventory rebuild, which could help semiconductor orders over the next few quarters.

We favor Altera over its main competitor based on our expectation the company will continue to gain market share this year, while demonstrating flawless execution. Altera remains better positioned than its competitor from a manufacturing standpoint (long-standing relationship with single foundry), in our view, said Gerra.

Robert W. Baird raised its 2011 EPS estimate for Altera to $2.55 on revenue of $2.138 billion from $2.45 on revenue of $2.095 billion, and its 2012 estimate to $2.85 on revenue of $2.433 billion from $2.70 on revenue of $2.37 billion.

Altera stock gapped open sharply higher March 2 at $41.30, compared to Tuesday's close of $41.23. The stock touched a new 52-week high of $43.22 during Wednesday's trading. But on March 3, the stock surpassed this level to reach a new high of $44.32.

But the stock has not stopped with that high yet. During Friday's regular trading it reached a new high of $45. The stock closed Friday's regular trading up 0.48 percent at $44.41 on a volume of 6.13 million shares on the NASDAQ stock market. However, in the after-hours, the stock moved down 0.11 percent to $44.36. The stock traded between $21.97 and $45 during the past 52 weeks.