Oppenheimer analyst Gary Hsueh this morning downgraded his ratings on both KLA-Tencor (KLAC) and Lam Reserarch (LRCX), citing signs of weakness observed on a recent trip through Asia.
On KLAC, he goes to Underperform from Perform; on LRCX he goes to Perform from Outperform.
“Right off the bat on our quarterly trip to Asia, things weren’t smelling right for semi cap equipment,” he writes in a research note. “decent sell-through in China during the Lunar New Year week in February, and better-than-expected February retail sales in the U.S. appear to justify slightly the inventory creep for semis in Q2, and DRAM remains tight. Yet, for semi cap equipment, there is no getting around the issue of customer concentration.” And he says checks find front-end semi equipment companies are facing a 15-20% Q2 drop in orders as Taiwan Semiconductor (TSM) cuts purchasing to zero in Q2 and Q3. So while he still likes the group long-term, he adds that “we have to face reality.”
For LRCX, he also cuts his June 2011 EPS forecast to $2.82, from $4.25, and chops his price target to $35, from $55.
For KLAC, his June 0211 estimate drops to $2.02, from $2.80. His target is now $25, down from $37.
He also trims estimates for Applied Materials (AMAT): for the October 2010 year, he goes to 83 cents, from $1, while for FY 2011 he now sees $1.29, down from $1.50. His target price drops to $17, from $20.
In today’s trading:
- LRCX is down $1.11, or 3.3%, to $33.15.
- KLAC is down $1.24, or 4.2%, to $28.21.
- AMAT Is down 16 cents, or 1.3%, to $12.20.
Article courtesy of BARRONS.com: Tech Trader Daily