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Technology Stocks : Cymer (CYMI)
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From: mopgcw3/3/2010 12:51:35 PM
2 Recommendations   of 25960
 
CS: Cymer Inc. (CYMI) OUTPERFORM S. Kumar
CP: US$ 33.68 TP: US$ 45 CAP: US$ 1b
Raising Estimates and Target Price to $45 (from $40)

! Please see sector note titled "Lithography is where the action is" that we are publishing.

! Reiterate Outperform on CYMI. Cymer is the clear leader when it comes to EUV source lasers, as the company working
closely with ASML to target production ready tools by 2012. Gigaphoton presented at SPIE and expects to have a prototype
for a 100W laser by mid 2011 and is targeting a 400W laser by 2014/2015 timeframe. We expect CYMI to maintain 70-75%
unit share in the immersion market (Giga is strong at Inotera and has business at Samsung for immersion). Immersion
industry unit expectations are creeping up - contacts suggest unit upside closer to 105-110 for immersion in 2010 versus
our litho model currently at 100 units - this was the key reason for us to take up our 2H10 estimates for CYMI.

! In addition to laser systems, we also think the IBP (installed base product) revenues are upticking for CYMI and are tracking
up low single digits in 1Q10 (we are modeling flat q/q); CYMI has commented that there is a potential to reach prior peak
pulse usage in 2010. Note that IBP revenues are already within 6% of prior peak revenues (recall last peak had some GLX
upgrade revenues) even though pulses are 12% below prior peak - which suggests to us that our estimate that CYMI IBP
revenues in 2H10 may prove to be a bit on the conservative side.

! Finally, we think CYMI continues to make progress toward shipping 2 TCZ systems. Note that AMAT, Orbotech and
Ultraclean have all been fairly bullish on LCD capex (up 60%+ y/y in 2010) - there may be additional TCZ opportunities that
can get created for CYMI. Lastly we continue to think CYMI will ship 6 EUV lasers to ASML in 2010 (we are modeling
revenue recognition on 4 units in 2010).

! We are raising our earnings estimate on CYMI from $2.63 to $2.75 for CY10, street is at $2.40. We are bumping up our PT
on CYMI from $40 to $45.
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