Lehman's take on the recent semi equipment price action: BUY!!!
Headline: Semiconductor Equipment: Stock Price Pressure Creates Buying Opportunity
Today's Date : 10/17/97
* Semiconductor equipment shares came under pressure yesterday, based on concerns about soft pricing and Summer orders in the chip industry. But equipment is not very sensitive to short-term trends in the chip business.
* Memory chip prices have generally been soft, but our surveys suggest that South Korean chip manufacturers plan to increase 1998 capital spending by 32% (in won) from a depressed 1997 level. The focus will be on advanced memories.
* There is concern about the level of investment that U.S. chip companies will make in 98. As of now they are planning a moderate increase for 98, and the numbers may be revised upwards as companies formalize their 98 budgets.
* Semiconductor equipment companies generally did well during the Summer. The 1.07 book-to-bill ratio for the three months which ended in September was the best September book-to-bill since 1991, when the data series began.
* Valuations may still appear to be high in semiconductor equipment , but we think they are justified by high growth prospects for 1998 and 1999. We would purchase the shares of better positioned semiconductor equipment companies.
Highlights:
We recommend purchase of the shares of the following semiconductor equipment companies:
Applied Materials (AMAT, 44 1/4, Rated 1, Footnotes A,C)
KLA-Tencor (KLAC, 62 1/4, Rated 2, Footnote C)
SpeedFam (SFAM, 52, Rated 1, Footnotes A,C)
Etec (ETEC, 53 1/2, Rated 1, Footnotes A,C)
PRI Automation (PRIA, 48 1/4, Rated 1, Footnote C) |
