CORRECTED - CORRECTED-UPDATE 1-BofA downgrades Kulicke & Soffa to underperfo
(Changes rating in headline, first bullet point and paragraph 1 to underperform from sell. Also corrects paragraph 2 to show the downgrade was after company reported results on Wednesday. Fixes typo in brokerage name)
* BofA cuts to "underperform" from "buy"
* Shares down 7 percent
Aug 6 (Reuters) - BofA Merrill downgraded Kulicke & Soffa Industries (KLIC.O) two notches to "underperform" on valuation, adding that while the company would see strong shipments in the second half of the year the revenue growth would not be sustainable into 2011.
The downgrade came after the company, which designs and makes semiconductor assembly equipment, delivered a blow-out third quarter and forecast solid numbers for the current quarter. [ID:nSGE6730PE]
Kulicke's shares, which were up 15 percent in post-market trade after the results, fell 8 percent to $7.00 in regular trade Friday on Nasdaq.
"The stock has far outperformed all other companies in our coverage universe and is up over 40 percent this year versus a 2 percent drop in PHLX semiconductor index .SOXX and 1 percent rise in S&P 500 index, analyst Krish Sankar noted.
It is prudent to rotate out of early cyclical stocks such as Kulicke & Soffa and invest into product cycle stories such as Ultratech Inc (UTEK.O), he added.
Sankar said as the company's customers -- OSATs (outsourced sub-assembly and test) -- slow down their capex in calender 2011, we expect this to further pressure Kulicke's top line," he said. (Reporting by Mansi Dutta in Bangalore)
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