CS: Cymer Inc. (CYMI) OUTPERFORM [V] S. Kumar
CP: US$ 36.54 TP: US$ 40 CAP: US$ 1.1b
Share gains at Samsung help an otherwise mixed quarter; Raising Estimates and Target Price to $40 (from $38)
! Bottom line. CYMI reported a mixed quarter, with a bit more positives than negatives. We slightly bump up our 2010 and
2011 EPS estimates to $2.62 and $2.85 (from $2.52 and $2.77), and our TP to $40, a 12x multiple of CY11 EPS, adjusted
for net-cash. We expect the stock could trend a bit weaker tomorrow given the miss in Q4, but share gains in immersion at
Samsung was a major takeaway from the call, and should limit near term downside. CYMI is a play on the higher growth
lithography market and over time will benefit from an increasing and relatively stable mix of installed base pulse revenues
(now over 60%) which helps multiples.
! Q3 beat, Q4 miss. Company reported Q3 rev/EPS of $141.7mm and 71c, above cons at $137mm and 64c. The beat was
driven by higher revenues (due to higher immersion unit shipments) and lower opex, but offset by lower gross margins. For
Q4 however, company guidance implied at mid-point rev/EPS of $142.5mm and 66c, below consensus at $151mm and
72c. The miss was due to lower immersion and EUV units than our model, offset by higher shipments of KrF. Gross
margins were guided slightly up to 49%, as TCZ revenue recognition impacts GM, offset by better absorption.
! Positives. (i) Lower opex helps provide Q3 beat. Q3 opex was $38.3mm, well below guidance level of $42mm. Higher
revenues were offset by lower GMs, but the lower opex and slightly lower share count and tax rates were able to provide
the 11c EPS beat to Q3 earnings; (ii) Mix helping market share. Company has shipped more than 2x the number of
immersion shipments made by its competitor Gigaphoton in the last 2 quarters. |
