Semi Equipment: Stifel Upgrades TER, PLAB, NVLS, CYMI

Stifel Nicolaus analyst Patrick Ho this morning turned bullish on the semiconductor equipment sector, raising his sector rating to Overweight from Neutral, and advising investors to “be aggressive taking a position in the group at current price levels.” He says that the rally which begain in late February in the group is still in the early innings.

His basic thesis:

• The sharp reduction in semi inventory could lead to under-supply in the next upturn.


• Chipmaker utilization rates are increasing, which should eventually lead to capacity buys.


• DRAM fundamentals are improving, which should eventually lead to pic-up in memory cap ex.


• Equipment industry orders are at a bottom, with new orders off 80%-90% from the last peak.

In relation to the call, he made the following upgrades:

• Cymer (CYMI), to Buy from Hold.


• Novellus (NVLS) to Buy from Hold.


• Photronics (PLAB) to Buy from Hold.


• Teradyne (TER) to Buy from Hold.

His other picks include Varian Semiconductor (VSEA), Lam Research (LRCX) and Rudolph Technologies (RTEC).