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Technology Stocks : Semi Equipment Analysis
SOXX 296.74+1.8%Nov 28 4:00 PM EST
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To: booney1 who wrote (84223)11/21/2019 11:42:40 AM
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Chip Equipment Stocks Slide Because an Analyst Sees Slowing Demand Ahead -- Barrons.com
DOW JONES & COMPANY, INC. 11:39 AM ET 11/21/2019

Symbol Last Price Change
AMAT 57.165 -2.485 (-4.17%)
LRCX 263.07 -11.06 (-4.03%)
QUOTES AS OF 11:40:17 AM ET 11/21/2019


Large cap semiconductor-equipment stocks, including Applied Materials(AMAT) and KLA, came under selling pressure Thursday after a bearish call on the group by UBS.

Analyst Timothy Arcuri says the stocks will face headwinds ahead as spending by chip makers peaks in the near term and then contracts for a few quarters.

Arcuri writes in a series of research notes that stocks in the group "have always followed quarterly revenue." He sees risk to estimates through 2020 given what he says has been "a very extended run-rate" in equipment from the foundry and logic chip sector. He thinks 2021 will be "a good year driven by memory," but that the industry is currently running above the levels he expects.

Arcuri cuts his ratings to Sell from Neutral on Applied Materials(AMAT) , to Sell from Buy on KLA (KLAC) and to Sell from Neutral on LAM Research(LRCX) . He also cut price targets on Applied to $48, from $49 and on KLA to $ 140, from $192. He keeps his Lam target at $140.

The analyst writes that demand from the foundry/logic "appears overextended." He says demand from the memory sector "has barely ramped off the bottom," but that he doesn't see enough of a broad recovery in equipment demand from memory chip companies to offset "a potentially big reversion" in foundry and logic.

In today's trading, Applied is off 3.5%, to $57.54; KLA is down 6% to $163.31, and Lam is down 3.3% to $265.12.

Write to Eric J. Savitz at eric.savitz@barrons.com
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