Stock performance is always the absolute measure. However, in this case, the claim is excess inventory will cause under-performance. If you read my full article on the subject, which includes data from tech companies that will report aggregate revenue this year of about $650B, you'll see my position is well documented. It was the BoA analyst that offered literally no substantiation for his claim.
Personally, I think for one to be right he or she must nail both cause and affect - less than that is a lucky guess.
so....let's check back on this thread in 3,6,9,12 months and see who called it right.
We will look at the performance of the big 3 (SNPS,MENT,CDNS) on an absolute level as well as a relative level against the S&P 500.
Start date is 11/23 or the date of Sumit's report if it is known.
This is to answer the question of which analyst is best at their job of predicting the future:
1. Sumit of BoA -predicts these stocks will not outperform.
2. Paul of NITR - predicts that Sumit is wrong.
3. Craig of FBR - ditto.
I'm betting on Sumit but only based on the weakness and vagueness of the list of arguments presented in this article. I've not read Sumit's original remarks on why he downgraded.
Paul says "The sky is not falling" -- Sumit merely moved his recommendation from buy to neutral. Craig is here committing the "Straw Man fallacy (Fallacy Of Extension): attacking an exaggerated or caricatured version of your opponent's position." His arguments here are similarly weak and meaningless, non-specific and hard to follow.
You can't always "buy". The market has rallied significantly since March and has anticipated and factored 1Q 2010 in already. The double booking is a bunch of hogwash. Leadtimes, if anything, have tempered a full recovery of semis to almost mediocre rates, with some leadtimes now being as long as 26 weeks. Nobody is flush with cash enough, or has a credit line anymore, to buy double of anything and distributors are not doing their jobs to low pass filter customer demand. It'll be a sluggish plod upwards because we're all afraid to boom again.