KLA-Tencor: Concerns Over June Orders

Mahesh Sanganeria, an analyst at RBC Capital Markets, yesterday morning cut his rating on KLA-Tencor (KLAC) to Sector Perform from Outperform. “After the recent run-up powered by accelerated share buyback and head count reduction… the stock has made significant advance towards our price target,” he wrote in a note.

Sanganeria says he is cautious on the stock for three reasons:

Near-term concerns related to June order expectations.

Slowdown in operating expense reductions.

Long-term concerns related to process control spending as a fraction of overall semi equipment spending.

He says March orders should be better than company guidance of down 5% sequentially, but that June expectations for orders may be too high. He expects the company to guide to orders flat to down 5% for the quarter.

KLA yesterday morning was down 55 cents at $54.17.

KLAC 1-yr chart