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Traders at Palma are Bearish on NVLS

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Traders at Palma are Bearish on NVLS

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Traders at Palma are Neutral on NVLS

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U.S. stocks wobbled Tuesday and ended the day mixed even as automakers reported improved auto sales and Warren Buffet’s Berkshire Hathaway said it would buy Burlington Northern Santa Fe Corp.  Traders were reluctant to place big bets as they awaited the outcome of a two-day FOMC meeting which got underway Tuesday and Friday's monthly jobs report.  Although expectations are the Fed would keep interest rates in the 0-0.25% range, Wall Street has been speculating if there would be a change of tone in the policy statement. 

Morgan Stanley this morning turned cautious on both the chip stocks and the semiconductor equipment sector, downgrading ratings on many names in the group.

Novellus (NVLS) posted Q3 revenue of $176.9 million, up 48.4% sequentially, down 29.3% year-over-year and ahead of the Street at $172.4 million. The semiconductor equipment company posted a non-GAAP loss of 3 cents a share; the Street had expected a 4-cent loss.

Bookings in the quarter were $171.5 million, up 54.3% sequentially; shipments were $165.4 million, up 37.9% sequentially.

CEO Richard Hill said in a statement that the company saw “strong customer order activity driven by improved fab utilization levels, increased memory prices and demand for PCs and smartphones.”

Semiconductor equipment stocks are lagging in today’s broadly rally, with many names trading in the red, after a bit of disappointing news buried in the generally upbeat Intel (INTC) earnings report.

Intel said it now sees capital spending for 2009 of $4.5 billion, plus or minus $100 million, which was down from previous guidance of $4.7 billion, plus or minus $200 million.

Novellus Systems (NVLS) shares are trading higher this morning after Pacific Crest analyst Weston Twigg boosted his rating on the stock to Outperform from Sector Perform.

“Near-term spending patterns should benefit Novellus as memory and foundry companies begin to accelerate node transitions, adding new chemical vapor deposition, physical vapor deposition and copper electroplate steps,” he writes in a research note. Twigg thinks the company is gaining share in CVD, could gain share in PVD and holding key customers in copper electroplate.