Oct. 13, 2014, 7:50 AM
- Firm increases price target to $85 from $78.
- Shares closed Friday -9.6% at $65.91 and are up 0.6% premarket.
Oct. 10, 2014, 9:59 AM
- Microchip's (MCHP -12.5%) calendar Q3 warning, which was accompanied by a declaration that it believes "another industry correction has begun and that this correction will be seen more broadly across the industry in the near future," is taking a heavy toll on chip stocks (SOXX -5.5%).
- Intel (INTC -4.2%) and many other chipmakers have joined the several firms that sold off AH yesterday in going in the same direction as Microchip: MU -5.8%. FSL -8.5%. BRCM -3.6%. SWKS -7.5%. RFMD -6.2%. XLNX -4.9%. MXIM -5%. AMBA -5.5%. IDTI -6.7%. CAVM -7.4%. AVGO -10.2%. SMTC -4.3%. SYNA -4.1%. POWI -6.9%.
- Chip equipment makers are also getting hit: AMAT -3.5%. KLAC -3.3%. LRCX -2.3%. UTEK -2.5%. KLIC -2%.
- As Microchip noted in yesterday's warning, the company's very diversified customer base, together with its recognition of distributor revenue on a customer sell-through basis rather than a distributor sell-in basis, often allow it to see industry changes before peers.
- The microcontroller vendor added its warning was driven by a September decline in sales to Chinese clients, and observed it has typically "returned to sequential revenue growth after two quarters" during past downturns.
- Chip stocks have had a good run over the last 12 months, aided by healthy mobile demand and the industry's consolidation wave.
Oct. 3, 2014, 4:47 PM
- Believing softer-than-expected foundry demand will take a toll in Q4 and 2015, ISI has downgraded KLA-Tencor (KLAC -0.5%) to Hold from Strong Buy. Shares ticked lower in spite of a 1% gain for the Nasdaq.
- KLA blamed light 14nm equipment orders from a foundry client (likely Samsung or Globalfoundries) for its soft calendar Q3 guidance. But the company also forecast demand would pick up in Q4, and said it was optimistic about 2015 (big 16nm/14nm investments have been expected).
- In addition to KLA, David Einhorn favorite Lam Research (LRCX +0.6%) has heavy foundry exposure. Einhorn and others have argued Lam is especially well-exposed to investments in technologies such as 3D transistors, multi-patterning, and 3D NAND flash, which are set to receive a disproportionate share of capex in the coming years.
Aug. 28, 2014, 4:28 PM
Aug. 15, 2014, 7:02 PM
- Applied Materials' (AMAT +6.3%) FQ4 guidance demonstrates its business is less cyclical than that of rivals KLA-Tencor (KLAC +1.4%) and Lam Research (LRCX +1.5%), argues Nomura. Whereas AMAT is guiding for flat Q/Q Oct. quarter revenue, KLA and Lam (more dependent on big foundry orders) are respectively forecasting 16% and 8% drops before expected rebounds.
- Nomura is also a fan of AMAT's strong Chinese display equipment exposure, and notes overlap with merger partner Tokyo Electron's (OTCPK:TOELF +5%) display ops is low.
- Jefferies echoes Lam Research's management (previous) by predicting technology inflections such as "a faster-than-expected 14nm FinFET ramp and a shift to flexible OLED by Samsung" will act as catalysts for AMAT over the next 6-18 months.
- Credit Suisse is more cautious: It likes AMAT's margin improvement, share gains, and exposure to display/solar recoveries, but also considers Lam a better play on investments in FinFET (3D transistors), multi-patterning, and 3D NAND flash. AMAT gets ~40% of its chip equipment revenue from chemical vapor deposition and etching products (account for a large portion of spending on cutting-edge processes), while Lam gets ~90%.
Jul. 31, 2014, 10:55 AM
- Like peer KLA-Tencor, Lam Research (LRCX +4.2%) provided a soft Sep. quarter outlook: It expects FQ1 revenue of $1.11B (+/- $50M) and EPS of $0.92 (+/- $0.07) vs. a consensus. of $1.15B and $1.00.
- But Lam also used its CC (transcript) to reiterate guidance for $32B in 2014 industry wafer fab equipment (WFE) spend, and for the company to outpace industry growth.
- It added foundry spend (30% of FQ4 shipments) is expected to strengthen thanks to FinFET (3D transistor) process investments, and that DRAM spend (39% of shipments) is benefiting from tight supplies. Lam also sees a healthy supply/demand balance for NAND flash, though it's a little cautious about near-term 3D NAND flash investments.
- Lam sees the share of WFE spending addressed by its products growing to 1/3 of WFE spend next year thanks to "technology inflections" (FinFET, 3D NAND, etc), and thinks its "technology inflections applications market share is in excess of 50% across [Lam's] portfolio of deposition edge and clean products."
- David Einhorn must be pleased with today's move.
- FQ4 results, PR
Jul. 30, 2014, 4:14 PM
Jul. 25, 2014, 3:29 PM
- David Einhorn's Greenlight Capital returned 7.9% after fees in Q2, bringing its YTD return to 6.4%. The S&P 500 returned 5.2% in Q2 and 7.1% YTD.
- Among the fund's biggest gainers was Micron (MU -1.2%), with Einhorn noting last year's spike in DRAM prices turning out to not be a blip, and that consensus estimates remain too low - get ready for more earnings surprises and multiple expansion, he says.
- "Nothing could be further from the truth," says Einhorn referring to media reports that he believes all tech is in a bubble. Among Greenlight's largest positions are Micron, Apple, Lam Research, and Marvell Technology. Of the Lam (LRCX -0.6%) position - which was started in Q2 - Einhorn says the fund's average purchase price is $54.07, representing 7x Greenlight's estimate of calendar 2015 earnings, net of cash (the stock's near $70 at the moment).
Jul. 8, 2014, 6:27 PM
- Applied Materials (AMAT) "made a compelling case that technology inflections could become tailwinds [for chip equipment demand] at the FinFET and 3D NAND transitions," writes Credit Suisse's John Pitzer after taking in the firm's analyst day (held at the Semicon West conference).
- Pitzer adds AMAT sees $10B+ in cumulative revenue opportunities from the deposition and etching markets related to 3D NAND flash investments. However, he thinks Lam Research (LRCX), which just offered a bullish analyst day outlook of its own, is a better 3D NAND play.
- Cowen's Timothy Arcuri argues strong FinFET (3D transistor) and 3D NAND capacity targets, together with healthy maintenance spend, "argues more re-rating for AMAT and the sector in general." At the same time, he's worried about the impact of 3D NAND growth on NAND supply, and thus the multiples afforded to SanDisk (SNDK), which has rallied strongly this year.
- AMAT remains confident the Tokyo Electron (TOELF) merger will close this year. The post-merger company will call itself Eteris. Analyst Robert Maire thinks AMAT/Tokyo will buy Entegris (ENTG) once the deal closes.
- KLA-Tencor (KLAC), though hiking its June quarter guidance, is a little cautious about near-term demand. "This is a quarter where we believe we're in a bit of a pause right now in the industry ... Bookings that we got, while strong, were really for foundry, and more for delivery and revenues that we'll see in calendar '15." Berenberg issued a cautious note last week.
- Trade group SEMI now expects total chip equipment spend to grow 20.8% in 2014 to $38.4B, and 10.8% in 2015 to $42.6B.
- Other industry names: ASML, UTEK, RTEC, KLIC, MTSN, ASMI, MKSI
Jul. 8, 2014, 1:24 PM
- Lam Research (LRCX +2.7%) guides during its 2014 analyst day (webcast) for $1B in 2014 operating cash flow, and for 2H14 revenue growth to be on par with 1H growth. The company also expresses confidence its recent share gains will continue.
- Shares are making fresh 52-week highs on an ugly day for tech. They soared in April following an FQ3 beat and bullish CC commentary, and rose two weeks ago following a Cowen PT hike.
- Lam's outlook comes as the chip equipment industry's Semicon West conference gets underway. Industry commentary has been largely (but not uniformly) bullish going in.
Jun. 23, 2014, 12:00 PM
- Cowen has upped its Lam Research (LRCX +1.6%) PT by $17 to $80, while reiterating an Outperform. The firm is upbeat about the impact of Samsung's 3D NAND flash investments, following delays.
- Shares now +24% YTD. They took off in April following an FQ3 beat, strong guidance, and a better-than-expected forecast for 2014 industry wafer fab equipment spend. They later added to their gains on news of a dividend launch and $850M buyback.
- Lam currently goes for 12x FY15 (ends June '15) EPS exc. net cash. David Einhorn disclosed a 1.2M-share position in May.
May 15, 2014, 6:12 PM
- David Einhorn's Greenlight Capital, a GM investor since 2011, unloaded its position in the auto giant (nearly 17M shares at the end of Q4) in Q1. (13F)
- In addition, Warren Buffett's Berkshire Hathaway cut its GM stake by 10M shares to 30M. (13F)
- While Einhorn sold GM, he bought into Nokia (NOK), establishing a 3.5M-share position ahead of the closing of the sale of its phone unit to Microsoft. Einhorn also started a 1.2M-share position in chip equipment maker Lam Research (LRCX).
- Dan Loeb's Third Point LLC, which first bought into Nokia in Q3 last year, maintained a 4.5M-share position in Q1. (13F)
- Einhorn wasn't kidding last month when he said he has added to the SunEdison (SUNE) position. Greenlight owned 11.8M shares of the solar project developer at the end of Q1, up from just 1.3M at the end of Q4 and good for a 4%+ stake.
Apr. 29, 2014, 5:44 PM
Apr. 29, 2014, 5:34 PM
- Lam Research (LRCX) is initiating an $0.18/share quarterly dividend (1.25% yield). The first dividend will be paid on July 2 to holders on record as of June 11.
- Lam is also launching an $850M buyback that replaces a prior $250M authorization (had $49M remaining). The new buyback is good for repurchasing 9% of shares at current levels.
- The capital return efforts come with Lam trading close to its 52-week high of $58.94. Shares soared last week after the chip equipment maker beat FQ3 estimates and offered strong FQ4 guidance.
Apr. 24, 2014, 1:42 PM
- Lam Research (LRCX +11%) beat FQ3 estimates and guided on its CC (transcript) for FQ4 revenue of $1.19B-$1.29B and EPS of $1.14-$1.28, above a consensus of $1.16B and $1.09. Ultratech (UTEK +3.6%) missed Q1 estimates, but has reiterated guidance for 25%-30% 2014 revenue growth (above a 23.5% consensus).
- Just as importantly for the industry, Lam has forecast the global wafer fab equipment market will be worth $32B in 2014 - $1B more than what Gartner previously forecast.
- Lam also mentioned it has "seen some strengthening" in DRAM equipment orders - clients have been conservative with their capex following industry consolidation - and a "sustained commitment" among logic/foundry clients (Intel and TSMC?) to advanced processes (20nm, 3D transistors, etc.). However, there have been "some slight delays" in 3D NAND flash investments.
- Chip equipment peers are also up: AMAT +1.4%. KLAC +1.5%. ASML +2.1%. ACLS +1.6%. CAMT +5.3%. RTEC +1.5%. PLAB +3.4%. One notable exception is Teradyne (TER -4.1%), which provided light Q2 EPS guidance - $0.36-$0.43 vs. a consensus of $0.49 - to go with a Q1 beat. Revenue guidance is in-line.
- The group sold off last week after ASML offered soft guidance and a cautious 2H outlook. KLA reports after the bell.
Apr. 24, 2014, 12:46 PM
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