U.S. Bancorp Piper Jaffray Initiates Coverage of the Semiconductor Manufacturing Technologies Sector
Buy Rating on AMAT and Neutral ratings on TER and KLAC
MINNEAPOLIS, Sept. 28 /PRNewswire/ -- U.S. Bancorp Piper Jaffray Senior Optical and Electronic Manufacturing Technologies Analyst Greg Konezny today initiated coverage of companies in the Semiconductor Manufacturing Technologies sector, including Applied Materials, Inc. (NASDAQ: AMAT -- $27.87, #) with a Buy rating and KLA-Tencor, Corporation (NASDAQ: KLAC -- $31.57, #) and Teradyne (NYSE: TER -- $19, #) with Neutral ratings. This coverage complements Konezny's existing coverage of other companies in this industry, including Entegris, Inc. (NASDAQ: ENTG -- $7.60, #@), Newport (NASDAQ: NEWP -- $13.71, #) and Veeco Instruments, Inc. (NASDAQ: VECO -- $25.09, #).
The Semiconductor Manufacturing Technologies sector focuses on existing and future technologies related to the manufacturing of semiconductor and related electronic devices. Specifically, it includes companies that provide manufacturing services (foundries, packaging), material science technologies, consumables, and manufacturing capital equipment to the semiconductor and electronics industries. These businesses provide enabling technologies to both integrated and fabless-device companies and are critical contributors in the effort to continually improve device performance and reduce manufactured cost.
``Although businesses in this segment have experienced a very difficult 2001 following excessive capacity expansion during 1999-2000, we believe much of this excess capacity will be worked off during 2002,'' said Konezny. ``As such, we are currently looking for a meaningful recovery in order levels and business activity by mid 2002.''
Applied Materials, Inc.
``We are initiating coverage of Applied Materials with a Buy rating and a 12-month price target of $35, based on a historical-peak-forward earnings multiple of 15 times estimated 2004 earnings-per-share (EPS) of $2.75, discounted back one year by 17 percent,'' said Konezny. ``Given the company's impressive historical performance and expectation of future market share gains, Applied Materials is a core holding for long term-oriented investors, in our opinion. In addition, it appears that downside risk to AMAT shares is limited based on current valuation multiples, which are near 1998 lows.''
Teradyne, Inc.
``We are initiating coverage of Teradyne with a Neutral rating and a 12-month price target of $20, based on a historical peak forward multiple of 12.5 times 2004 EPS of $1.90, discounted back one year by 17 percent,'' said Konezny. ``We believe meaningful downside risk exists for TER shares from current levels based on 1998 trough valuation levels.''
KLA-Tencor, Corporation
``We are initiating coverage of KLA-Tencor with a Neutral rating and a 12-month price target of $33, based on a peak forward multiple of 15 times 2004 EPS of $2.60, discounted back one year by 17 percent,'' said Konezny. ``We believe there is meaningful downside risk to current Street EPS expectations due to recent economic instability and a potential slowdown in spending for next-generation manufacturing processes. Based on 1998 trough cycle valuations, we also believe there is downside risk to KLA-Tencor's current valuation.''
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