Cymer's Earnings Could Be 'Flattish' Next Cycle
05.16.05, 11:50 AM ET
Credit Suisse First Boston maintained a "neutral" rating on Cymer (nasdaq: CYMI - news - people ) with a $20 price target. The research firm cited lower demand and high inventories for lithography original equipment manufacturers (OEM). Nikon, which accounts for about 20% of Cymer's business, released weak fiscal 2005 results, moving 193 IC (integrated circuit) steppers compared with guidance of 210 and lowered guidance for 2006 shipments by 4%. For 2005, CSFB expects a 17.4% year-over-year decline in total lithography units and an equal drop is expected for deep ultraviolet units (DUV), light sources used in semiconductor manufacturing, of which Cymer is a leading supplier. "DUV demand is lower than prior expectations in 2005," the research firm said. "Improvements in productivity has led to fewer lithography units cycle to cycle--Nikon's results reflect chip companies' efforts to extend older-generation lithography to minimize overall lithography costs. A lower DUV unit demand is negative for Cymer's unit-driven gross margin model. CSFB conclude that, "Nikon's results are consistent with our view that Cymer's unit shipments are unlikely to accelerate in the second half of 2005." The research firm also warned that, "an OEM inventory reduction is a risk for street consensus estimates which is modeling Cymer's earnings to accelerate from approximately 26 cents in the first half of 2005 to 45 cents in [the second half]. Despite rising average selling prices, declining units could drive Cymer's peak earnings flattish next cycle." |
