Some chipmakers overbought, Needham slashes ratings to 'hold'

Nova

14/06/2023 14:22

** Shares of chip makers slide premarket after brokerage
Needham downgrades rating to "hold" from "buy" citing some
stocks have been overbought
    ** Applied Materials Inc  AMAT.O , KLA Corp  KLAC.O ,
Advanced Energy Industries Inc  AEIS.O , Onto Innovation Inc
 ONTO.N , Nova Ltd  NVMI.O  and Axcelis Technologies Inc
 ACLS.O  down between 0.7% and 3% after Needham downgrade 
    ** Companies are riding the AI-hype and are overvalued in
the near-term leaving no good entry points for investors, says
Needham 
    ** At the current scenario any bad news could deliver a blow
to the sector, adds brokerage  
    ** As of last close, the stocks are trading between 18.7x
and 31.8x forward earnings, while the Philadelphia SE
Semiconductor Index  .SOX  is trading at 27.12x
    ** Still, brokerage believes the next sales growth cycle for
semiconductor equipment will be from 2024 through 2026, with
2026 the peak
    ** Cooling inflation, a technology refresh cycle after COVID
and adoption of next-generation chip making technologies to act
as tailwinds for sector between 2024 through 2026 - Needham
    ** Up to last close, the stocks had risen between 27% and
127% YTD

 (Reporting by Johann M Cherian and Shashwat Chauhan in
Bengaluru)
 ((johann.mcherian@thomsonreuters.com;))