Needham downgrades shares of Applied Materials (AMAT) and Novellus (NVLS) to buy from strong buy.
Analyst Cristina Osmena says AMAT has appreciated 40% from lows that were hit after the September 11 attacks, while Novellus is up 42%. She thinks that the share prices have largely discounted the September bottom in equipment orders, semiconductor revenues as well as a second-half 2002 recovery. At current levels
she advocates a disciplined buying strategy in front of continued uncertainty in the broader economy and a potentially weak Christmas sell-through in the electronics market.
For AMAT, Osmena keeps fiscal year EPS forecast of $1.03, $0.63 in 2002 and $50 stock price target. For Novellus, she keeps 2001 EPS of $1.35, $0.74 in 2002 EPS and a $41 stock price target.