Sector Snap: Chip stocks mostly up led by Broadcom

Broadcom shares rose $1.45, or 5.5 percent, to $27.67 in midday trading.

Piper Jaffray on Monday transitioned coverage of Broadcom to analyst Gary W. Mobley, who raised Broadcom's rating to "Buy" from "Hold." Mobley also lifted a share price target to $31 from $24, implying upside of 18 percent from the stock's closing price on Thursday, the last trading day before the July 4 holiday weekend.

"In essence, we believe the Street is underestimating the revenue potential for a few product cycles," Mobley wrote in a note to investors.

Mobley cited a number of factors that could boost Broadcom's sales, including the iPhone, a design win at Nokia for its Videocore processors, and the transition to high-definition video.

Separately, Goldman Sachs analyst James Covello in a client note Sunday named Broadcom as the communications chip maker likely to see the biggest benefit from the iPhone. He also cited Intersil Corp. and Linear Technology Corp. as the analog chip makers best positioned to benefit from the iPhone.

Intersil shares rose 37 cents to $23.44, while Linear Technology added 15 cents to $31.82.

The Philadelphia Semiconductor Sector Index rose 7.35, or 2.1 percent, to 361.97 by midday.

Bucking the climb in the broader chip sector were SanDisk Corp. and Micron Technology Inc., after UBS analyst Uche Orji reduced share price targets on the flash memory manufacturers. SanDisk shares lost 67 cents, or 3.6 percent, to $17.76, while shares of Micron slipped 23 cents, or 4 percent, to $5.54.

Meanwhile, shares of Nvidia Corp. hit a new year low of $11.79. The stock plunged 30 percent on Thursday after the graphics chip maker reduced its second-quarter revenue forecast. In midday trading Monday, shares were down 65 cents, or 5.2 percent, to $11.84.