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Technology Stocks : Cymer (CYMI)
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To: Darryl Olson who wrote (24060)1/26/2000 10:09:00 AM
From: Rustam Tahir  Read Replies (1) of 25960
 
Here's Deanha's reasoning behind the downgrade of ASML last week:

- The key issue is incremental bookings, and we believe ASML may have a tough time significantly topping its 2H99 bookings performance in units in 1H00. For the year though, ASML should experience 30% plus unit bookings growth, which will likely drive further share price appreciation. In short, we believe the peak acceleration phase of bookings has passed, incremental growth will be slower, and the easy money has been made in the stock. Consequently, we are taking our foot off the gas somewhat with the rating change to Outperform.

ASML's 2H99 bookings increased to 192 units from 133 in 1H99, and backlog increased to 159 from 104.

- Raising EPS estimates
We are increasing our F2000 EPS estimate to $2.50 from $2.45 and F2001 to $3.70 from $3.20.

Investment summary and conclusion:
- We are raising our target on ASML shares to $160 from $135 and we are downgrading our rating on ASM Lithography (ASML) based on valuation to Outperform from Strong Buy.
- ASML shares are trading at 38x our new F2001 (December) EPS estimate of $3.70, which is the highest multiple in our universe of coverage by 6 points. The group average is 27x.
- We believe ASMl's fundamental momentum will likely continue and expectations that the company?s earnings potential over the next two years will exceed current estimates will likely drive ASML shares higher over the next two quarters. Especially as the year-over-year growth rate for semiconductor industry revenues continues to accelerate into mid-year 2000.

rustam

ps. no comments about Intel's new fab in Arizona?
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