Credence (CMOS) looks like a bargain, according to Merrill Lynch.
1) it is expected to grow 44% a year, much faster than this sect's average of 15%, but it traded at only 14 x FY98. [current price 29.5/ E(FY98) 2.11 = 14x]
2) it has little exposure to the DRAM.
3) while other well known SCE companies has a 15-20% move in the last two days, the less known CMOS stands still under. This alone indicates CMOS is currently being discounted. It should catch up with the group.
[Merrill Lynch, meanwhile, called the sell-off a buying opportunity for select semiconductor equipment stocks. And anyone who missed the bargain prices Friday will probably have another opportunity in the next month, because of expected continued volatility in the sector, says Merrill semiconductor equipment analyst Robert stern.
"In observing the industry for ten years, I have developed a rule: They can go down, but they can't stay down," Stern said in a conference call with analysts. "They are quite volatile. I think it is important for investors to take advantage of the volatility. We don't have a buy on the whole industry, but we feel that with the current sell-off, we are approaching a major buying opportunity in the next month or so."
Stern has buy ratings on two semiconductor equipment stocks because they have growth levels above the current 15% growth for the sector. One is Credence Systems (NASDAQ: CMOS), a test equipment company expected to have 44% revenue growth. He also likes it because it has limited exposure to the DRAM sector. Unlike the logic chip sector, the DRAM sector is likely to experience continued limited capital spending growth,says Stern.
He also has a buy rating on Brooks Automation(NASDAQ : BRKS), which is focused on the "cluster tool" segment - a segment that is expected to have faster growth than "stand alone" tools. Stern also says there is a lot of growth among the companies on the Brooks customer list, which is topped off by Novellus and Lam Research.]
For details check this out.
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