JP Morgan Downgrades RF Micro Devices (RFMD)

JP Morgan analysts Christopher Danely and Venk Nathanumi downgraded RFMD to Underweight from Neutral, largely on weakness in the handset market.

Weak PC and handset demand along with deteriorating conditions in Europe have resulted in declining lead times and push-outs of components. JP Morgan analysts believe these are bad signs and a downturn in the semiconductor industry is coming.

RF Micro Devices' largest customer, Nokia (NYSE: NOK)(ADR), lowered guidance on June 15th. JP Morgan expects Nokia to push out orders at component vendors, including RFMD. Nokia accounted for 25% of RFMD's March quarter sales.

JP Morgan believes Samsung and Research in Motion (NASDAQ: RIMM) will also miss June quarter guidance. 65% of the world's handset demand could miss.

The analysts said, "RFMD stock is trading at roughly 1.0X our new C10E sales, towards the low end of its historical range of 0.7-1.5X sales. We are concerned about downside to estimates. As a result, we are downgrading the stock from Neutral to Underweight rating."

JP Morgan does not have a price target for RFMD.