Prudential Turns Negative On Semiconductor Issues

Analyst Ben Pang cites peaking utilization rates and expectations for lower capital spending budgets in 2006

Prudential cut its investment recommendations on the semiconductor companies Mattson Technology (MTSN ), KLA-Tencor Corporation (KLAC ), and Lam Research( LRCX ) on Thursday, explaining that their industry faces sluggish growth.

Analyst Ben Pang moved the sector to unfavorable from neutral, Mattson to underweight from neutral, and both KLA-Tencor Corporation and Lam Research to neutral from overweight.

Pang cited factors such as peaking utilization rates and projected 7% lower capital spending budgets in 2006. He cut his price target on Mattson to $7.50 from $8. Although Mattson made significant improvements in operating leverage, Pang thinks the company's continued improvement could be curtailed by sluggish industry growth.

Before it's here, it's on the Bloomberg Terminal.