Apple shares may be in the doldrums after a disappointing iPhone launch, but one of its suppliers is moving higher.
Imagination Technologies has added 26.5p to 333.9p after Morgan Stanley issued an overweight rating on the chip designer. The bank said Imagination's shares had been hit by poor newsflow in the past six months, but now things seemed to be looking up:
Apple announced that the new iPhone5S would be compatible with OpenGL 3.0 and that the graphics performance would be much better – this points to Apple moving to Rogue which is the new generation GPU from Imagination.
Apple confirmed that the new iPhone 5C would run on A6 chip. We believe that some investors had been worried that the C version would have been designed with a single chip solution from a third party and thus without Imagination.
Broadcom announced it would buy the LTE chip business of Renesas. Renesas LTE chip includes an apps processor with an Imagination GPU. Broadcom has never used Imagination before. This provides some upside risk to earnings next year, should Broadcom ramp at Samsung and others.
Meanwhile Imagination has also announced a new licensing agreement with Taiwanese semiconductor company MediaTek.
Rival chip designer Arm has slipped 5p to 981.5p on profit taking following recent gains.
Elsewhere ITV is 2.2p better at 181.8p after Nomura raised its price target from 170p to 200p, saying:
Continued UK macroeconomic improvement means we raise our ITV 2013 ad forecast to 1.5% (from 1%) and our 2014 forecast to 4% (from 2%).
