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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (47258)	5/25/2001 6:45:16 AM
From: scott_jiminez	Read Replies (1) \| Respond to of 70976

What negativism? AMAT, NVLS, KLAC are currently at multiples (P/S, P/B) that (aside from the 2000 mania top) correspond to previous cycle top valuations, not cycle bottoms. These stocks have nearly doubled off their lows, and most investors seem convinced that the bottom is in, and a new upcycle has begun. Were on the same page, Jacob, ....for those stocks. As I showed here Message 15846592 , it is precisely the large cap, well known names in this sector that are trading at absurd valuations. Perhaps they are perceived as safe havens. But if you examine many of the mid- and smaller-cap stocks, valuations is generally much more reasonable. The p/s of Klic (~1.2), for example, suggests that investors acknowledge that we are indeed at a nadir in the cycle, that downside risk on the stock is now greatly reduced, and a significant rebound from these levels would make sense. In short, a sampling of most stocks in the sector other than AMAT, NVLS, and KLAC will show that valuations do represent a large degree of negativism. Thus, the smaller issues may be poised for a greater response to signs of a recovery than the larger issues. [The overriding caveat here is that, in my experience, valuations in the equipment sector are a lousy benchmark to judge relative value. Judgement of all the factors occurring in a given environment, a measure that can neither be graphed nor easily debated, is by far the most important criteria for astute investing.]

To: Jacob Snyder who wrote (47258)	5/25/2001 9:25:22 AM
From: advocatedevil	Read Replies (2) \| Respond to of 70976

More on the Pru upgrade: Update: Prudential Upgrades Three Chip-Equipment Makers By Eric Gillin Staff Reporter 5/25/01 9:19 AM ET (Updated from 8:15 a.m. ET) Semiconductor stocks might be suffering through a wintery economic climate, but according to Prudential Securities analyst Shekhar Pramanick, springtime isn't that far off. The analyst upgraded three semiconductor-equipment stocks, KLA-Tencor (KLAC:Nasdaq - news), Teradyne (TER:NYSE - news) and Applied Materials (AMAT:Nasdaq - news), to strong buy from accumulate, saying a new profitability cycle is on the horizon. Pramanick said that semiconductor equipment makers will recover during the next few months. The first signs, he said, are occurring now in the form of end-market stabilization -- meaning the situation with customers won't get any worse. "We believe investors should not wait for an equipment order recovery but rather build positions on near-term volatility with a 12-to-18 month time horizon, with upside potential of 50% or more as we enter the next semi cycle," he wrote in a research note. All three companies received new price targets along with those new ratings. Pramanick raised KLA-Tencor's price target to $69 from $58, after the stock ended yesterday's session at $57.07. He upped Applied Materials' target to $67, up from $60. That stock closed at $54.42 yesterday. And Teradyne's new price target was put at $53, up from $40, having closed yesterday at $43.92. The analyst said semiconductor revenue will pick up, possibly as soon as August and September, reversing the sequential revenue declines that the industry has been posting since last November. Historically, the second half of the year, even in a downturn, is better than the first half, and with Microsoft's (MSFT:Nasdaq - news) Windows XP hitting the shelves, college students returning to school and the Fed cutting rates, the analyst thinks there are some nice catalysts for revenue improvement. Semiconductor equipment orders will begin improving by October, Pramanick wrote in his note. Orders peaked in October 2000, coming in around $3 billion, but dropped to $713 million for April 2001 -- a 76% decline. In previous down periods, like February 1996 to September 1996 and November 1997 to September 1998, the decline in equipment orders was far less severe, which signaled to Pramanick that a bottom is close at hand. "We believe there are two primary risks to our thesis," he wrote. "One, no seasonal recovery due to reduction in consumer spending and two, prolonged and pervasive economic malaise which could delay a 2002 global economic recovery." Three other companies also received new price targets, but no new ratings. Lam Research (LRCX:Nasdaq - news), rated at accumulate, was given a price target of $36, up from $28. Novellus (NVLS:Nasdaq - news), which has a strong buy rating, received a $68 price target, up from $64. Pramanick raised the price target on Kulicke & Soffa Industries (KLIC:Nasdaq - news) to $20 from $15. The company is rated at hold. thestreet.com AdvocateDevil