Semiconductor-Equipment Stocks Shift Into High Gear – Investor's Business Daily
TRENDING: Just Two Magnificent Seven Stocks Clear This Earnings Bar
Companies that make equipment to manufacture computer chips and displays were in high demand among investors on Monday.
IBD’s Electronics-Semiconductor Equipment industry group rose 2.6% on the stock market today. The group, which includes 33 stocks, ranked No. 3 out of 197 industry groups in performance on Monday.
Applied Materials (AMAT) on Monday broke out of a 14-week cup-with-handle base with a buy point of 47.69. It was up 1.9% to close at 48.05 on the stock market today. In intraday trading, it reached a 17-year high of 48.53.
RBC Capital Markets upgraded Applied Materials to outperform from sector perform and raised its price target to 55 from 48.
Applied Materials “is positioned to drive revenue and EPS expansion despite cyclical concerns,” RBC analyst Amit Daryanani said in a report Sunday. “With about 34% of revenues coming from display and services, AMAT is better positioned to deal with (wafer fabrication equipment) cyclicality compared to peers.”
IBD’S TAKE: Applied Materials is currently ranked No. 21 on the IBD 50 list of top-performing growth stocks.
Needham analyst Edwin Mok said he expects robust demand for semiconductor equipment to continue in 2018.
“Despite fear of peaking, we believe current business levels will continue to grow, driven by further investments in memory (chip production) due to an explosive growth in data, initial ramp-ups of multiple Chinese fab investments and a broadening of demand in multiple end markets, including industries such as automotive and industrial,” he said in a report Monday.
He upgraded Cohu (COHU) to buy from hold, based on its exposure to the automotive and industrial markets and several new growth drivers.
Mok downgraded Brooks Automation (BRKS) to hold from buy on valuation.
Elsewhere, Susquehanna Financial Group upgraded ASML Holding (ASML) to positive from neutral.
Last week, KeyBanc Capital Markets analyst Weston Twigg outlined five reasons investors should own semiconductor-equipment stocks. Those reasons included attractive valuations and strong end-market demand.
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(© Jon Krause)
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