US Chip Equipment Stocks to Retest Lows, 'Not Cheap'
SAN FRANCISCO, Oct 15 (AFX) - Shares in US semiconductor equipment companies will
likely retest their lows "as they are not cheap by almost any metric and marginal weakness
persists through the next several quarters," DB Alex. Brown analysts said, adding they
would be "lightening positions" in the segment.
"We maintain our view that fundamentals will likely remain weak, several companies are at risk of missing the
current quarter's order guidance and downward surprises to calendar 2002 capex plans will likely trigger
several more iterations of downward estimate revisions through the first half of 2002."
A "void" in spending on 300-millimetre technology spending in the fourth quarter and first half of next year will
limit any inflection point in fundamentals, the analysts said.
"In general, we are concerned that flattish order guidance is not reflective of deteriorating fundamentals as
pricing is increasingly being used as a leverage point for equipment companies to get orders with longer-term
delivery dates."
Longer-term investors in the sector with a nine-month or longer investment horizon "should focus on those
names well positioned to be next cycle's winners," the analysts said, pointing to Novellus Systems Inc and
Brooks Automation Inc.
At 12.34 pm in New York, the Philadelphia semiconductor (Sox) index dropped 29.91 points, or 6.31 pct, to
443.87, while the Nasdaq composite slipped 29.62, or 1.74 pct, to 1,673.78. |
