Two Picks To Play Emerging Semi-Cap Trends
David Ng, 01.10.06, 10:43 AM ET
Morgan Stanley upgraded its view on the semiconductor capital equipment sector to "attractive" from "in-line," saying semi-cap stocks are likely to outperform both the broader market and semiconductor stocks.
The research firm cited Applied Materials (nasdaq: AMAT - news - people ) and KLA-Tencor (nasdaq: KLAC - news - people ) as "the best way to play" the emerging trends.
"A key theme is increasing broadband connectivity between wired and wireless devices," Morgan analyst Timm Schulze-Melander wrote in a recent report.
"This should drive demand for higher performance semiconductors, in our view, whether it be logic devices or data storage such as NAND flash, mobile DRAM and higher-density DRAM."
The research firm said semi-cap stocks have likely ended their three-year underperformance versus semiconductor stocks thanks to new consumer product cycles and less overall volatility.
Morgan reiterated "outperform" ratings on Applied Materials and KLA-Tencor and raised the target prices to $23 and $60, respectively, from $17.50 and $55.
Elsewhere in the sector, the research firm raised the target prices on FormFactor (nasdaq: FORM - news - people ), Lam Research (nasdaq: LRCX - news - people ) and LTX (nasdaq: LTXX - news - people ) to $28, $43 and $5.50, respectively, from $21, $31 and $4.50. |
