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Technology Stocks : Cymer (CYMI)

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From: mopgcw	9/15/2009 3:11:31 PM
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CS: Cymer Inc. (CYMI) NEUTRAL S. Kumar CP: US$ 36.81 TP: US$ 38 CAP: US$ 1.1b CYMI increases F3Q Rev guidance - Raising Estimates • CYMI raises F3Q09 rev guidance. Prior to markets open today, CYMI issued a press release indicating it now expects F3Q Revs up 30% q/q (~$81mm) vs prior guidance of up 15% q/q (~$72mm). Accordingly we are revising our F3Q Rev/EPS from $72mm/10c to $81.2 mm/16c. We are revising system shipments from 8 units to 13 units in F3Q and from 12 units to 19 units in F4Q. • Investment case. We believe upside to revenues is primarily driven by system shipments of high end immersion orders from ASML. While TSMC and INTC continue to be strong, both Korean memory companies are spending on DRAM technology upgrades. CYMI has aggressively reduced opex, we are modeling Sept qtr opex at $26.5mm (down 34% from peak levels in C1Q08). Although company did not provide any margin guidance, systems carry a higher margin, and we are tweaking up our GM estimate by 70 bps. • Catalysts. CYMI is the 5th semicap company to revise guidance upward for the Sept qtr, as such today's revisions is not a complete surprise given ASML's positive pre-announcement last week (VSEA and AMAT yet to raise guidance). Recall that we had also noted that ASML is seeing strong orders post our Asia trip takeaways 2 weeks ago (though CYMI is a bit less leveraged to the Inotera orders). That said, the magnitude of the pull ins into September and lack of light source inventory build despite the pull-ins bodes well for shipments in Dec and 2010. We maintain our positive bias on CYMI. • Estimates and Valuation. We are revising F3Q Rev/EPS from $71.8mm/10c to $81.2mm / 16c and revising F4Q Rev/EPS from $79.4mm/21c to $92.7mm/34c. Cons estimates prior today's press release was $72.2/9c and $83.3mm/21c respectively for Sept and Dec qtr. Our PT of $38 represents 15x CY11 EPS adding back $4 in cash per share.

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