Applied Materials, Lam, KLA Corp mixed as UBS cuts estimates, PTs on lower sales

Jun. 28, 2022 11:25 AM ETApplied Materials, Inc. (AMAT), LRCX, KLACBy: Chris Ciaccia, SA News Editor7 Comments

Lam Research headquarters in Silicon Valley

Sundry Photography/iStock Editorial via Getty Images

Applied Materials (NASDAQ:AMAT), Lam Research (NASDAQ:LRCX) and KLA Corp (NASDAQ:KLAC) shares traded mixed on Tuesday as investment firm UBS cut earnings estimates and price targets on the group of semiconductor equipment makers, citing lower forecasts for the rest of the year and into 2023.

A group of analysts, led by Timothy Arcuri, noted that major memory producers are starting to "moderate" their spending budgets and wafer capacity for both NAND and DRAM in response to lower demand.

"We see major producers building inventories in hopes of demand improvement and we expect they will additionally cut capex and are already starting to push out tool shipments," the analysts wrote.

Applied Materials (AMAT) and Lam Research (LRCX) both saw their shares fall around 0.5% on Tuesday, while KLA Corp (KLAC) held on to slight gains.

In addition, the analysts noted that they expect wafer equipment sales in the second-quarter to be around $24B, compared to $20.3B in the first-quarter, but they will peak in the fourth-quarter at $27.5B, before "stepping down every quarter of [2023]."

Lam Research (LRCX) is still the firm's preferred stock among the three, as the firm believes it is more likely to see more "sideways" action than the other two.

Last week, KLA (KLAC) announced that it had entered into accelerated share repurchase agreements with Goldman Sachs and Citibank for repurchasing $3B of KLA's common stock.

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