Semi Equipment Analysis Message Board

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Technology Stocks : Semi Equipment Analysis

SOXX 314.52

-0.6%

Dec 11 4:00 PM EST

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To: The Ox who wrote (6995)	11/21/2002 2:36:48 AM
From: The Ox	Read Replies (1) of 95572

www.soundview.com Stock Net: We are raising our price target on KLA−Tencor to $45 from $35. We believe that the company will continue to deliver better fundamental performance relative to its peers within our semiconductor manufacturing coverage space. Industry Opinion: We believe demand for semiconductor manufacturing equipment has been adjusted downward to reflect a digestion period following 80% growth in 2000 and a general lack in demand at the electronic end markets. Company Description: KLA−Tencor is the world’s leading supplier of process control and yield management solutions for the semiconductor and related industries. Ticker: KLAC Price (11/19/2002): $36.79 52−Wk. Range: $70.58−$25.16 Market Cap (B): $6.9 Shares Out. (M): 189.1 Rating: Outperform Price Target: $45.00 • We continue to like KLA−Tencor at these levels. We believe that the company will continue to show superior fundamental performance relative to the group as yield management becomes a larger piece of the capital spending pie. • We are raising our price target to $45 from $35, as we believe we need to more accurately reflect the leverage once the cycle begins. Meanwhile, our calendar 2003 estimates remain at revenue of $1.55B and EPS of $0.95. • We believe that the company is at least still on target to meet its guidance of flat orders for the December quarter, and an upside to orders is an increasing possibility in our view. • Please see this morning’s semiconductor manufacturing industry note from SoundView entitled "Looking for the Next Catalyst" for more details. Price Target Valuation and Risks Our price target of $45 is based on a P/S multiple of 5.6x our calendar 2003 revenue estimate of $1.55 billion. The risks include continued slowness in the ramp of 300mm wafer production. Furthermore, the semiconductor industry is historically cyclical. Potential factors − such as continued weakness in end−market demand, unexpected market−share loss due to management’s inability to execute, and/or product obsoleteness − could adversely affect our estimates, ratings and price targets.

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