Novellus shares up on CSFB upgrade
By Dan Gallagher, MarketWatch
Last Update: 12:27 PM ET Feb. 11, 2005
SAN FRANCISCO (MarketWatch) -- Shares of Novellus Systems Inc. surged more than 6 percent Friday after the company scored an upgrade from Credit Suisse First Boston, which said the maker of semiconductor manufacturing tools is in a good position to grow market share in a declining industry.
The change came on the eve of an earnings report from the company's largest competitor, Applied Materials Inc. (AMAT: news, chart, profile) , which is set to report results for its first fiscal quarter on Feb. 15.
In Friday's report, CSFB analyst John Pitzer noted that Novellus has pickup up several management hires from Applied Materials over the past six months, "which should eventually help product positioning at customer sites."
Shares of Novellus (NVLS: news, chart, profile) were trading up $1.79, or 6.5 percent, at $29.31 as of mid-day Friday. Applied Materials shares (AMAT: news, chart, profile) were also trading up 32 cents, or 1.9 percent, at $16.98 thanks to broad strength across the chip sector.
In his note, Pitzer cited as reasons for his upgrade an improving "addressable" market for Novellus, better customer leverage and improving market share.
"Our call on NVLS today is pretty simple - despite our less than enthusiastic view on the industry - we think if Novellus executes over the next 9-12 months this stock could go to the high $30s or low $40s..." wrote Pitzer, who raised his rating from "neutral" to "outperform."
Pitzer also wrote that Novellus is trading at a 17 percent discount to its peer group, based on his calculations.
On Jan. 27, Novellus reported fourth-quarter profits that more than tripled from the same period the previous year - beating Wall Street's expectations. See full story.
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