Novellus Should Rise on Bullish Call

AmTech:

Novellus Systems (NASDAQ:NVLS): upgrade to Buy. We think much of yesterday's neg pre-ann was based on 1-time events including CMP rev recognition change, inventory write-down, & higher tax rate. Based on checks we think a restructuring of NVLS's biz is currently underway and CMP and dry strip will be discontinued (unprofitable), along w/layoffs.

This will improve NVLS's profitability & make it more attractive as a take-over candidate. Stock is currently trading near trough valn levels at 1.6x book. PT $27.50.

Notablecalls: I like this call as the timing is just perfect. The stock got killed yesterday following the pre-announcement and looks to be ready for a bounce.

Comments

[Daniel Jacome]

NVLS has made the rumor rounds -- did not know about the CMP biz getting the ax -- what does this mean for CCMP (Cabot)?