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Merrill Upgrades United Microelectronics to 'Buy'


Merrill Lynch upgraded United Microelectronics (UMC) to buy from neutral.

Analyst Dan Heyler thinks the time has come to buy United Microelectronics, given what he sees as limited downside risk, an improving returns profile, and attractive valuation. He says margins are likely to show material improvement on rising units. Heyler notes the company should meet the high end of its third-quarter guidance, and thinks momentum is likely to carry into the fourth quarter. He raised his 2004 net and pretax profit estimates by 14%, 21% respectively.

Also, Heyler says as utilization could trend to 90% in December, he believes customers are likely to become more aggressive towards wafer ordering in the first-half of 2004. Heyler sees 10 cents 2003 earnings per American Depositary Share (EPADS), and 19 cents EPADS in 2004; he set a $7.42 12-month target.


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