Shares Of Chip Equipment Makers Rise On Upbeat Analysts' Comments
Dow Jones Online News, Friday, December 17, 1999 at 18:28
By Mark Boslet, Staff Reporter
PALO ALTO, Calif. -(Dow Jones)- The stocks of several makers of
semiconductor production equipment rose after a Merrill Lynch & Co.
analyst raised price targets on two of them and Chase H&Q (formerly
Hambrecht & Quist Inc.) held an upbeat conference call.
On the conference call, analyst Eric Chen said he believed chip-giant
Intel Corp. (INTC) was accelerating its adoption of 300-mm technology by
six months.
The use of 300-mm silicon wafers - 12-inches in diameter rather than
the 8-inch-diameter wafers used today - reduces manufacturing costs by
allowing more chips to be produced from a single wafer. It also requires
large investments in new equipment, which will benefit equipment makers.
Merrill Lynch raised its price target on Novellus Systems Inc. (NVLS)
to $120 from $100 and its target on KLA Tencor Corp. (KLAC) to $115 from
$90, Merrill analyst Tom Diffely said.
Merrill also lifted its 2000 earnings estimate on Novellus to $4 a
share from $3.35 and raised its estimate for KLA.
Novellus is winning more business from Intel and Taiwan chip-giant
Taiwan Semiconductor Manufacturing Co. (TSM), Diffely said, adding KLA
is seeing increasing business in Taiwan and Japan.
Chen said Intel appears to be planning for volume production using
300-mm wafers in early 2001 instead of the company's original target of
late 2001.
"This is a major development" and should bring a wave of new business
to equipment companies, he said.
Chen said he sees PRI Automation Inc. (PRIA) and Applied Materials
Inc. (AMAT) especially benefiting from Intel's decision. H&Q put the two
companies on its focus list, which identifies companies poised for
short-term stock appreciation. Chen has "buy" ratings on both.
An Intel spokesman noted the company announced in June it expected to
begin production with 300-mm wafer technology in 2002. The chip maker
has a 300-mm plant, or fab, under development in Oregon and expects to
begin equiping it next year, the spokesman said.
Novellus shares were up 11%, or $8.469, to close at $85.156 Friday on
volume of three million shares. PRI was up 17%, or $8.125, to close at
$56.50 on volume of two million shares, compared with a daily average of
365,800.
KLA rose 4% and LAM Research Corp. (LRCX) moved ahead 1.6% while
Applied Materials ended fractionally higher.
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