RS on PRIA:
PRI Automation, Inc.
NASDAQ: PRIA $20.94
Buy
F2001E EPS: $0.65, down from $1.40
F2002E EPS: $1.45, New
Sue Billat, Semiconductor Equipment/Foundries
“We believe PRI Automation may be less impacted by the general sector slowdown due to its positioning in the automation segment, particularly for 300-mm wafer fabs,” said Billat. “However, we do not believe that the company is immune to the sector weakness as capacity additions to 200-mm fabs have slowed dramatically. While 300-mm wafer pilot plans remain on track, the level of automation required for such fabs, in our view, is not likely to be as high as that for subsequent full production versions. After spending $2 billion on 300-mm equipment in 2000, we expect chipmakers to invest $6 billion in 2001 and $15 billion in 2002 on these plants. This tripling of spending in 2001 on 300 mm equipment stands in stark contrast to our overall expectations of a 20 – 30% drop in equipment spending (including 300 mm). In addition, we expect the ramp in circuit design activity and corresponding strength in the photomask industry to be a bright spot for PRI. As photomasks become more important and strategic, we expect chipmakers to invest in photomask stockers, which provide automated handling to increase productivity while protecting the masks from damage. Last quarter, the OEM business, which sells robots to chip equipment suppliers, accounted for 40% of revenues. We expect the OEM business to be negatively impacted in the current quarter and through the summer as PRI’s customers ramp down equipment shipments. At only 12 times our revised CY02 numbers, PRI is trading at a discount to its front end peers which we find unwarranted given that we believe the company represents a good way to play growth areas such as increasing demand for fab automation and the transition to 300 mm, in our view. Accordingly, we are reiterating our Buy on PRIA.” |
