A Wall Street analyst on Monday turned cautious on semiconductor equipment stocks ahead of a major industry conference.


Needham analyst Edwin Mok cut his price targets on four chip-gear stocks: Applied Materials (AMAT), Ichor Holdings (ICHR), Lam Research (LRCX) and Ultra Clean Holdings (UCTT). However, he kept his strong buy ratings on Applied Materials and Ichor and buy ratings on Lam and Ultra Clean.

In a report, Mok said he is cautious heading into the Semicon West conference next week in San Francisco. The show runs July 9-12.

“We expect to hear mixed data-points at Semicon West,” he said. “We expect WFE (wafer fabrication equipment) companies to provide a more modest second-half 2018 outlook based on the well-documented push-outs at the leading memory chipmaker (Samsung) and some uncertainties around timing of several projects.”

Consumable Suppliers Attractive

He now expects WFE sales to grow just 4% this year, vs. his prior forecast for 9% growth.

He lowered his price target on Applied Materials to 60 from 68 and on Ichor to 35 from 38. Mok trimmed his price target on Lam to 230 from 270 and on Ultra Clean to 25 from 28.

Applied Materials fell 1.1% to 45.68 on the stock market today, while Ichor rose 0.5% to 21.33. Lam rose a fraction to 173.05, and Ultra Clean dropped 1.5% to 16.35.

In the current environment, Mok favors consumable suppliers to the chip-gear market, including Cabot Microelectronics (CCMP). He also likes Cohu (COHU) because of its high exposure to the automotive and industrial end markets and the potential for a highly accretive acquisition of Xcerra (XCRA).


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