BancBoston Robertson Stephens Upgrades AMAT and KLAC to a Strong Buy Rating from a Buy, Raises Estimates on AEIS, AMKR, LRCX, and TSM
SAN FRANCISCO--(BUSINESS WIRE)--Sept. 14, 1999--BancBoston Robertson Stephens managing director and senior semiconductor equipment analyst Susan H. Billat, a 1999 Wall Street Journal All-Star Analyst, today upgraded Applied Materials, Inc. (NASDAQ:AMAT - news) and KLA-Tencor (NASDAQ:KLAC - news) to a Strong Buy rating from a Buy.
In addition, Billat raised estimates on Advanced Energy Industries, Inc., (NASDAQ:AEIS - news), Amkor Technology (NASDAQ:AMKR - news), Lam Research, Corp. (NASDAQ:LRCX - news) and Taiwan Semiconductor Manufacturing (NYSE:TSM - news).
Applied Materials, headquartered in Santa Clara, Calif., is the world's leading supplier of semiconductor wafer fab equipment. KLA-Tencor designs, develops, manufactures, markets and services yield management and process monitoring systems for the semiconductor industry.
Advanced Energy is a leading supplier of power conversion and control subsystems used in plasma-based thin film deposition and etch systems. Amkor Technology, Inc. is the world's largest provider of semiconductor packaging and test services.
Lam Research is a leading manufacturer of semiconductor processing equipment used in the fabrication of semiconductors with core competencies in etch and post chemical mechanical planarization cleaning. TSMC was founded in 1987 as the first pure integrated circuit IC foundry and has become the largest foundry in the world.
''From suppliers to the suppliers (Advanced Energy), to franchise players (KLA-Tencor and Lam), to the leading front-end equipment companies (Applied Materials) and end-user/foundries in chip fabrication and packaging (Taiwan Semiconductor and Amkor), we are finding strength and strong visibility across the food chain,'' said Billat.
''We are upgrading Applied Materials and KLA-Tencor to a Strong Buy ratings from Buy ratings,'' said Billat. ''We believe that sector fundamentals are tracking ahead of expectations set in the wake of Applied's fiscal-third quarter earnings announcement. We are raising our fiscal 2000 earnings-per-share estimates for Applied from $2.80 to $2.85. In our opinion, capacity continues to tighten at the leading edge, and we believe that this will drive sustainable incremental demand for semiconductor capital equipment.''
''We believe KLA-Tencor's outlook for both the short-term and long-term is very strong, as chipmakers focus on yield improvement strategies for the transition to 0.18 micron process technology and for new materials such as copper and low-k dielectrics, said Billat. ''We believe that visibility has improved significantly for KLA-Tencor during fiscal-first-quarter 2000 and that it is maintaining its leading market share in wafer inspection and in most areas of metrology. We are raising revenue and earnings-per-share estimates for KLA-Tencor for fiscal 2000 from $1,105 million to $1,135 million and from $1.70 to $1.80, respectively,'' said Billat.
''Based on our recent industry checks, we believe that Advanced Energy has continued to see strength in its core semiconductor OEM business through the summer despite seasonality concerns,'' said Billat. ''Accordingly, we are raising our third quarter 1999 earnings-per-share estimate from $0.12 to $0.14, thereby raising our earnings-per-share estimate from $0.42 to $0.44. We believe that Advanced Energy's shares are attractively priced at 29 times our 2000 earnings-per-share estimate and we reiterate our Buy rating.''
''Consistent with our thesis, we believe the outsourcing trends continue to strengthen in the semiconductor industry, directly benefiting Amkor,'' said Billat. ''We believe that Amkor's business has been strong through the summer as tightening capacity and higher utilization rates have improved overhead absorption and supported firmer pricing to the benefit of margins and earnings. As such, we are raising our third-quarter 1999 earnings-per-share estimate from $0.16 to $0.18, to reflect the continuing strength we see in Amkor's business.''
''We believe Lam will recognize both bookings and shipment for its long delayed CMP tool this quarter. Our conversations with their customers indicate general satisfaction with the tools,'' said Billat. ''In addition, we believe Lam may be taking market share from Tokyo Electron. Tokyo Electron recently lost a patent infringement suit against Tegal, and appears to be struggling with its product strategy and its dependence on Japanese chip-makers. As a result, we are revising our fiscal-first-quarter 2000 earnings-per-share estimates from $0.50 to $0.52.''
''Consistent with our thesis, outsourcing trends continue to strengthen in the semiconductor industry, directly benefiting TSMC, in our view. Tightening capacity is sustaining utilization rates above 100% despite significant capacity additions. We believe these factors are driving better overhead absorption and a more favorable pricing environment to the benefit of margins. In our view, TSMC's fundamentals continue to strengthen and, accordingly, we are raising estimates and maintaining our Buy rating. We are raising our fiscal 1999 and 2000 earnings-per-share estimates to $0.49 and $0.65 from $0.48 and $0.62, respectively.''
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