SoundView Upgrades Photronics to 'Outperform'

Analyst Michael O'Brien sees continued benefit from cost reductions for the chip-equipment maker

SoundView upgraded Photronics (PLAB ) to outperform from neutral.

Analyst Michael O'Brien says the 7 cents earnings per share from operations beat his and the consensus estimates of breakeven, and the top line also was better than expected. He notes excellent cost controls added to the bottom line, and he sees continued benefit from cost reductions.

O'Brien notes gross margins rose 480 basis points to 31.4%, vs. his estimate of a rise of 90 basis points. He says the mask industry lags the semiconductor and chip capital-equipment markets; SoundView's recent upgrade of the semiconductor sector weighting signals an improvement in masks.

He narrowed the 30 cents fiscal 2003 (Oct). loss estimate to a 23-cent loss, and raised the 55 cents fiscal 2004 earnings per share estimate to 64 cents earnings per share. O'Brien also raised his target to $27.

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