Yet another endorsement from Lehman:
Headline: Etec Systems:Notes From DuPont Photomasks 2Q98 Conference Call
Author: Edward C. White, Jr., CFA 1(212)526-4744/Andrew Galligan
Rating: 1
Company: ETEC
Country: COM CUS
Industry: SEMICO
Ticker : ETEC Rank(Prev): 1-Buy Rank(Curr): 1-Buy
Price : $42 7/8 52wk Range: $69-27 Price Target: $65
Today's Date : 01/22/98
Fiscal Year : JUL
* DuPont Photomasks, a large Etec customer, reported 2Q98 earnings yesterday. In addition, the company discussed its capital spending plans for 1998 and 1999.
* DuPont originally expected to spend between $90-95 mil. on capital expenditures in 1998, but revised it upward to $95-100 mil. Mgmt, in response to a query, announced PRELIMINARY 1999 cap ex of approx. the same as in 1998.
* While the slight increase in projected 1998 cap ex is positive for Etec, we believe the stock responded negatively to the news of no growth in projected 1999 capital expenditures.
* DuPont management also mentioned it is seeing a strong demand for leading edge masks (0.35 micron and less accounted for 44% of sales, up from 26% y-o-y), and a very fast acceleration of 64 Mbit DRAM masks.
* We view the 1999 cap ex plans with skepticism, as we believe the strength in underlying demand for 0.25 and 0.18 micron reticles will ultimately require DuPont (and its competitors) to increase investment in reticle writing tools.
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BUSINESS DESCRIPTION: Etec Systems is the leading manufacturer of equipment used to produce reticles, which are glass plates to transfer semiconductor chip designs to wafers.
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