Morgan Stanley More Positive on Semiconductor Capital Equipment Sector
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Price: $492.32 -0.78%
Rating Summary:
37 Buy, 10 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
37 Buy, 10 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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CONTRIBUTOR http://notablecalls.blogspot.com/
- Morgan Stanley is raising their view on Semiconductor Capital Equipment to Attractive from In-Line and upping most of their ratings and price targets. Unlike the consensus, the firm believe semi cap equipment stocks will soon reflect a bottoming of manufacturing utilizations in 1H07, an inflection in capital equipment orders in 2H07, and robust capital spending growth in 2008. Consequently, they see a combination of earnings growth and multiple expansion driving 20%+ appreciation in the average semi cap stock over the next 12-18 months.
MSCO sees bottom-up 10-15% capex growth in 2008, flat to down 5% capex in 2007 (vs. +2% previously). They assume non-strategic NAND suppliers will cut capacity expansion plans this year. However, bottom-up 2008 capex analysis indicates spending should pick up, driven primarily by the foundries/NAND flash suppliers and increasing capital intensity as the industry commences the move to 45nm. DRAM concerns in 2007 are overblown. DRAM capex $ per incremental unit shipment in 2007 remains below historical peaks, and DRAM capital intensity remains reasonable relative to historical trends.
Winners will have leverage to 45nm and company-specific product/profitability initiatives: They are upgrading ratings on Applied Materials (Nasdaq: AMAT) and KLA-Tencor (Nasdaq: KLAC) to Overweight, maintaining Overweight-V ratings on LAM (Nasdaq: LRCX) and FormFactor (Nasdaq: FORM), downgrading Cymer (Nasdaq: CYMI) to Underweight and maintaining Novellus (NVLS) at Underweight.
Notablecalls: Not actionable but good to know category. Some of this stuff may be good for a short-term fade.
For more calls go to http://notablecalls.blogspot.com/
- Morgan Stanley is raising their view on Semiconductor Capital Equipment to Attractive from In-Line and upping most of their ratings and price targets. Unlike the consensus, the firm believe semi cap equipment stocks will soon reflect a bottoming of manufacturing utilizations in 1H07, an inflection in capital equipment orders in 2H07, and robust capital spending growth in 2008. Consequently, they see a combination of earnings growth and multiple expansion driving 20%+ appreciation in the average semi cap stock over the next 12-18 months.
MSCO sees bottom-up 10-15% capex growth in 2008, flat to down 5% capex in 2007 (vs. +2% previously). They assume non-strategic NAND suppliers will cut capacity expansion plans this year. However, bottom-up 2008 capex analysis indicates spending should pick up, driven primarily by the foundries/NAND flash suppliers and increasing capital intensity as the industry commences the move to 45nm. DRAM concerns in 2007 are overblown. DRAM capex $ per incremental unit shipment in 2007 remains below historical peaks, and DRAM capital intensity remains reasonable relative to historical trends.
Winners will have leverage to 45nm and company-specific product/profitability initiatives: They are upgrading ratings on Applied Materials (Nasdaq: AMAT) and KLA-Tencor (Nasdaq: KLAC) to Overweight, maintaining Overweight-V ratings on LAM (Nasdaq: LRCX) and FormFactor (Nasdaq: FORM), downgrading Cymer (Nasdaq: CYMI) to Underweight and maintaining Novellus (NVLS) at Underweight.
Notablecalls: Not actionable but good to know category. Some of this stuff may be good for a short-term fade.
For more calls go to http://notablecalls.blogspot.com/
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