March 27, 2009, 11:44 am
Novellus Could Be Takeover Target, Oppenheimer Says
Posted by Eric Savitz
Novellus (NVLS) shares are trading higher today after Oppenheimer analyst Gary Hsueh upped his rating on the stock to Perform from Underperform.
Hsueh gave three reasons for his upgrade:
The company’s “era of share loss is at an end,” which makes valuation at 1.6x tangible book value too steep a discount versus peers.
NVLS should benefit from DRAM industry adoption of copper in the second half.
Hsueh writes that he can “no longer ignore NVLS as a potential M&A target.”
He hiked his price target on the stock to $20, from $9, largely “encompass the probability of a deal” at around $23 a share, based on a valuation of 1.5x EV to normalized sales.
Hsueh also trimmed his loss estimates for the company: he now sees NVLS losing $1.95 a share in 2009, versus $2 previously; for 2010, he now sees a loss of $1.45, versus $1.63 previously.
NVLS today is up 84 cent,s or 5.2%, to $17.14. |
