UPDATE 1-Stifel raises semiconductor capital equipment sector
May 18 (Reuters) - Stifel Nicolaus raised the semiconductor capital equipment sector to "overweight" from "neutral," citing a sharp reduction in semiconductor inventory levels and increasing chipmaker utilization rates.
A sharp reduction in semiconductor inventory levels could lead to an undersupply situation in the next upturn, and increasing chipmaker utilization rates should eventually spur new equipment capacity buys, analyst Patrick Ho wrote in a note to clients.
Ho, who raised the stocks of Cymer Inc (CYMI.O), Novellus Systems Inc (NVLS.O), Photronics Inc (PLAB.O) and Teradyne Inc (TER.N) to "buy" from "hold," said improving fundamentals in the dynamic random access memory chip market should lead to a return in memory capex spending.
The analyst expects companies such as Varian Semiconductor Equipment Associates Inc (VSEA.O), Lam Research Corp (LRCX.O) and Rudolph Technologies Inc (RTEC.O) to outperform over the next 12 to 18 months.
Cymer shares were trading up 5 percent at $25.90, while Novellus shares rose 5 percent to $17.62 Monday morning on Nasdaq.
Shares of Teradyne were trading up 3 percent at $6.05 on the New York Stock Exchange. (Reporting by Bijoy Koyitty in Bangalore; Editing by Anne Pallivathuckal)
