CES Indicative Of Improved Outlook: FBR Research (NVDA, MRVL, BRCM, QCOM, TXN etc.)

Analysts Craig Berger and Robert Pikover of FBR Capital Markets report that the latest edition of the Consumer Electronics Show (CES) at Las Vegas was optimistic about future demand trends and innovation potential. Attendance was also higher compared to last year. Some key takeaways from the CES are that chip firms will remain strong in the coming year, iPhone (NASDAQ: AAPL) imitators will abound, and wireless technology will be the way to go. Technology innovation will continue to be a focal area, and the semiconductor industry will see a ‘Super Cycle’ this time round.

Nvidia (NASDAQ: NVDA) expects chipset revenues to be flattish in 2010, followed by a possible decline. There are possible scenarios where Nvidia can achieve past revenue peaks of $1.2 billion in 3Q with high gross margins. The newly launched Tegra 2 claimed nearly 50 design wins and is expected to drive revenues of $200 million in 2010. Major auto names like Audi, Volkswagen, Skoda and Bentley are expected to feature the new processor by 2012.

Marvell (NASDAQ: MRVL) has been rated an Outperformer with a target of $24. Buying Marvell ahead of 4Q earnings could help take advantage of a likely new margin model, which could raise margins to 60%. Smartphone shipments will be a major growth driver, with China being the primary target market. Qualcomm (NASDAQ: QCOM) is another Outperformer, with its Snapdragon proving a winner with 15 OEMs on 40 devices. Mediatek is a long-term threat to Qualcomm.

Broadcom’s (NASDAQ: BRCM) open house indicated positive trends ahead, resulting in an Outperform rating and a price target of $37. Revenues are expected to be at the higher end of guidance, with 1Q figures only slightly hampered by greater enterprise spending. Wi-Fi Bluetooth and other combo chips, and Broadcom’s impressive IP portfolio will contribute to meaningful growth in 2010.

Texas Instruments (NYSE: TXN) expects robust business in 1Q, with increased shipments for customer replenishment. Capacity expansion has allowed Texas Instruments to reduce lead time and prevent hoarding by customers. This is good for the sustainability of its near-term growth, and the rating given is Outperformer with a target of $33.

Atmel (NASDAQ: ATML) could show much higher revenues than anticipated in late 2010, thanks to maXTouch. Another plus for Atmel is the robust microcontroller demand. ON Semiconductors (NASDAQ: ONNN) is another Outperformer, which would do well to announce a small quarterly dividend to reassure investors that it is a stable, income-generating security. Zoran (NASDAQ: ZRAN) has not been rated, but the Blu-ray DVD unit should offset the declining red laser market.