Five Picks In Semiconductor Capital Equipment
06.06.05, 11:37 AM ET
<<Bear Stearns weighed in on the semiconductor capital equipment industry, stressing that it "remains a growth cyclical and should get a premium to pure cyclicals."
The research firm understands that certain investors are dubious as to if semi caps is a growth industry at all. "The semiconductor capital equipment industry has seen its growth rate slow some post the popping of the technology bubble. . .In our view, higher-than-cyclical growth rates, continued strong margin performance, impressive cash generation and balances and the positive overhang of 'the next big thing' should enable equipment stocks to post" multiples high than market and cyclical valuations, Bear Stearns said.
"What could be the 'next big thing?' Home networking, automotive applications such as telemetry services, flat-panel TVs, national security measures, nanotechnology and radio frequency identification tags are a few areas the research firm is looking to spur growth.
Bear Stearns has "outperform" ratings on Applied Materials (nasdaq: AMAT - news - people ), Credence Systems (nasdaq: CMOS - news - people ), Lam Research (nasdaq: LRCX - news - people ), Mattson Technology (nasdaq: MTSN - news - people ) and Novellus Systems (nasdaq: NVLS - news - people ), with respective target prices of $24, $12, $33, $12 and $33.
Bear Stearns concluded, "While we are certainly in agreement that the mid-teens growth rates demonstrated through the 80s and most of the 90s are unlikely to reemerge, we also believe that the 'death of tech' as a growth vehicle is vastly overplayed. Thus, we continue to believe that a premium to typical cyclical sectors is appropriate.">> |
