>>Citing an acceleration in sustainable semiconductor-production equipment order flows, expectations of increasingly better technology news and growing evidence of an improving economy, analyst Byron Walker raised his recommendations on eight chip-equipment makers.
In particular, Applied Materials (AMAT: news, chart, profile), ATMI Inc. (ATMI: news, chart, profile), KLA-Tencor (KLAC: news, chart, profile), Lam Research (LRCX: news, chart, profile), Photronics (PLAB: news, chart, profile) and Varian Semiconductor (PLAB: news, chart, profile) were all upgraded to "buy" from "neutral."
Moreover, Novellus Systems (NVLS: news, chart, profile) was lifted to "buy" from "reduce" and ASM International (ASMI: news, chart, profile) was raised to "neutral" from "reduce."
Walker also raised price targets for the stocks, all of which were all moving higher in afternoon action. Varian led the way with a 4.1 percent gain, followed by ATMI's 3.7 percent gain, a 2.5 percent advance for KLA-Tencor and Lam Research's 2.2 percent increase.
Although he called the group expensive, Walker said that semiconductor-production equipment, or SPE, stocks have historically moved with improving orders. He believes orders have bottomed and will accelerate in the next two quarters.
As such, the analyst believes his earnings forecasts and implied valuation are less important at this stage of the recovery than accelerating SPE orders and the likelihood of increasing estimates.<<
UBS to CFZ
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