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Needham & Company Starts KLA-Tencor (KLAC) at Buy; Strong Earnings and Cheap Stock

March 26, 2013 7:51 AM EDT Send to a Friend
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Price: $71.84 +0.62%

Rating Summary:
    12 Buy, 9 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 21 | Down: 35 | New: 7
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Needham & Company initiates coverage on KLA-Tencor (NASDAQ: KLAC) with a Buy rating and $61 price target citing strong earnings power but an undervalued stock.

"As the leading supplier of process control and yield management solutions to the semiconductor industry, KLA benefits from the growing use of process control at the leading edge due to the increased process complexity and the introduction of 3D device architectures," analyst Y. Edwin Mok comments. "As the industry recovers, we believe margin expansion will drive upside to consensus estimates throughout CY2013. Despite having the highest gross and operating margins among its peers, KLAC is trading at a discount on P/E due in our view to the perceived risk of its high exposure to logic/foundry. However, we expect the P/E valuation gap to close as KLA continues to outperform the sector. We believe KLAC offers investors the opportunity to leverage a growing segment within the industry, with upside to earnings and potential for multiples expansion."

The firm set FY13 EPS estimates of $3.38 and FY14 of $4.61.

For an analyst ratings summary and ratings history on KLA-Tencor click here. For more ratings news on KLA-Tencor click here.

Shares of KLA-Tencor closed at $51.65 yesterday.




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