Deutsche Bank Upgrades Novellus Systems (NVLS) to Hold; 2010 Outlook Largely Discounted

October 22, 2009 7:25 AM EDT

Deutsche Bank upgrades Novellus Systems (Nasdaq: NVLS) to Hold. Price target increased from $13 to $18.

Deutsche analyst says, "Novellus Systems reported 3Q09 results in-line with expectations and guided 4Q09 ahead of expectations. The 2H09 rebound in wafer fab equipment spending is clearly stronger than we had originally anticipated, but we believe our 2010 outlook is largely discounted. Operational improvements, market share stability, and stronger 2010 earnings power lead us to upgrade the stock to Hold. We are adjusting our PT to $18 based upon stronger earnings power than we had anticipated for 2010.

"While we are believers in the long-term secular growth of memory (e.g. NAND flash), we expect technology upgrades to largely support spending through 1H10, but 2H10 spending could potentially disappoint should meaningful memory capacity spending push to 2011, as we believe it could...Our price target equates to ~16x our C2010 EPS of $1.09. This reflects our initial 2010 CAPX outlook."

To see more analyst ratings on NVLS Click Here.

Novellus Systems, Inc. develops, manufactures, sells, and supports equipment used in the fabrication of integrated circuits or semiconductors.

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