TerrAscend (CSE:TER)
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Makers of semiconductors and related equipment are getting a second look on Wall Street this week, thanks in part to more encouraging industrial output numbers, with special attention for Teradyne Inc. (TER) and Avago Technologies (AVGO).

Bullishness on semiconductors isn't new on the Street, with Caris & Co. and Wachovia analysts among the voices forecasting stronger demand as long ago as July.

But a cluster of upgrades Tuesday suggested a new focus on the sector, as Avago shares rose 3.2% to $17.18 and Teradyne rose 11.5% to $9.22.

Visiting makers of semiconductors and components in Asia this week, Oppenheimer analyst Rick Schafter told clients that most companies hinted third-quarter sales are ahead of original expectations, while colleague Gary Hsueh detected "general tightness" in semiconductor test equipment.

Teradyne "is now ripped, with big muscles" to deliver earnings in 2010, Hsueh told clients in a Tuesday note.

Oppenheimer raised its rating on Teradyne to outperform from perform, citing the test equipment plus new business from Qualcomm (QCOM) and fourth-quarter order visibility.

Also Tuesday, analysts at Deutsche Securities, Barclays, Morgan Stanley and Citigroup opened coverage of Avago, a day after Standard & Poor's upgraded its credit rating on the former semiconductor division of Hewlett-Packard Co. (HPQ) and Agilent Technologies (A).

Avago has logged 2% compound growth since 2005, compared to the industry's 3% contraction over that period, Deutsche Securities analysts Ross Seymore, Sukhi Nagesh and Bob Gujavarty wrote as they issued a buy rating on the stock.

Barclays analyst Romit Shah, who also issued a buy rating, said he expects Avago to grow faster than the overall market in 2010.

Global semiconductor sales are on track to shrink 15% to 20% in 2009, he noted. But Avago's sales are expected to shed a smaller 13%, Shah wrote in a Tuesday note to clients.

Morgan Stanley, which issued a third Avago buy rating, said the company has "finally been set to realize its full potential," while Citigroup analysts sounded a more cautious note as they started their coverage with a hold.

"Wireless has generated the lions' share of growth the past few years, so we might become more constructive on Avago if a better balance in business growth manifests," Citigroup analyst Terence Whalen wrote.

-By Brendan Conway, Dow Jones Newswires; (212) 416-2670; brendan.conway@dowjones.com