Morgan Stanley cut KLA-Tencor (KLAC) estimates and targets, as well as several other semiconductor equipment names including Applied Materials (AMAT), Cymer (CYMI) and Novellus (NVLS).
Analyst Steven Pelayo says he cut the -15% 2002 semiconductor capital expenditure estimates to -20%, and cut the +30% 2003 estimate to +20%. Although Pelayo says a recovery is still underway, he thinks consensus numbers suggest unrealistic growth. Pelayo thinks these stocks are stuck in trading range, and are waiting for a capitulation/revision by management as well as an improvement in end markets. He expects both these signals in the next 90 days.
Pelayo cut Cymer's $1.30 2003 earnings per share estimate to $1.20, and cut Applied Material's $0.65 2003 EPS estimate to $0.45. He also cut the 2003 estimates on Advanced Energy Industries, Axcelis Technologies, DuPont Photomasks, Kulicke & Soffa, Lam Research, LTX Corp., Photronics, Teradyne, Varian Semiconductor, Electroglas and Mattson Technology. Peyalo maintains his industry view rating of attractive.