Salomon Smith Barney upgraded Cabot Microelectronics (CCMP) to buy.
Analyst Gil Yang says now that the most damaging bad news appears to be behind the story, he believes investors will begin to focus on the positive drivers of stock. He believes positives for this story are expectations that fab utilization rates in Asia will bottom in the June quarter, combined with book-to-bill ratios for both TSMC and UMC that are now above 1. Yang believes the company's long-term topline growth should be at least 30%, with 35% EPS growth as margins expand from fixed cost leverage and expense control. He set a new $85 target, and sees shares trading at 36 times his $2.30 2002 EPS estimate.