Seeking Alpha

Northland starts coverage on chip equipment stocks

  • Applied Materials (AMAT +0.1%), ASML (ASML -0.6%), Lam Research (LRCX +0.4%), and Brooks Automation (BRKS +2.1%) have been started at Outperform, and KLA-Tencor (KLAC +0.9%) and Mattson (MTSN -0.9%) have been started at Market Perform.
  • The firm argues new leadership, an expected chip equipment up cycle, and "industry timing for new technology inflection points" will benefit Applied.
  • It views Lam as having "the best share gain potential" among large-cap equipment makers (its 20nm process strength is cited), and sees the company getting a lift from rising memory capex.
  • Northland thinks ASML can outgrow the wafer fab equipment market (expected by Gartner to grow 17% next year), and expects the Cymer acquisition to lift margins.
  • It offers a more subdued take on KLA, asserting the company's "historical growth premium versus the industry could be peaking," even as it benefits from investments in next-gen manufacturing processes. Northland also believes Applied is set to "become more competitive" relative to KLA.
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