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Technology Stocks : Cymer (CYMI)

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From: mopgcw	10/21/2009 1:19:37 PM
	1 Recommendation of 25960

CS: Cymer Inc. (CYMI) NEUTRAL S. Kumar CP: US$ 38.85 TP: US$ 41 CAP: US$ 1.2b F3Q09 Review, Raising Estimates and Target Price to $41 (from $38) • F3Q09 results: increase target price. CYMI reported F3Q09 Rev/EPS of $92.3mm and 36c vs. CS at 81.2mm / 16c and cons at $82mm/17c. Company had guided F3Q09 rev at up 30% q/q ($81.2mm). This upside was driven by strength in spares with 3Q spares revenue at $70.7 mm vs our estimate of $56.5mm. CYMI shipped 12 units (11 Immersion, 1 KrF). Bookings of $99mm (up 39% q/q) mainly consisting of immersion tools. Company installed 14 light sources at chip makers up from 8 units in F3Q. Avg ASP of light sources was $1.8mm (down 11% q/q). • Catalyst. CYMI guided F4Q Revs flat q/q and GM at 47%-48%. We were estimating Rev/EPS at $90.9mm/32c and consensus at $91mm/28c. Company expects ASP to remain flat q/q. • Investment case. Positives. (i) Spares revenue grew ~29%q/q mainly due to utilization pickup in Foundry and DRAM space (ii) Incremental gross margins of 68% in 3Q drove upside to GMs (product mix more systems, lower start up expenses, volume) (iii) With a immersion units TAM of 85units (midpoint of company guidance of 75-95 units) and assuming mkt share of 70% would result in ~60 immersion units for CYMI in CY10. This would imply shipment upside to ~15 units per quarter in CY10 vs 11 units in 2H09. Negatives. (i) Q4 was only guided flat q/q (though could be conservative) (ii) Rolling 4Q qtr units market share declined from 80% in 2Q to 72% in 3Q (iii) NAND order visibility remains limited. • Estimates & Valuation. We are revising our CY10 Rev/ EPS from $445.2mm/$2.12 to $471.2mm/$2.44 (higher spares). We are revising our 2011 EPS estimate from $2.63 to $2.98 and bumping our PT from $38 to $41, or ~15x CY10 EPS ex-cash.

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