Oppenheimer Downgrades Nanometrics to Perform (NANO, INTC, KLAC)

Oppenheimer is out with a research report this morning, where it downgrades shares of Nanometrics

to Perform from Outperform; it has a $10.00 price target on the stock, down from $13.00. The Oppenheimer analysts said, “We are downgrading NANO to Perform with a $10 PT (prior $13) as a last-minute audible called by Intel’s

(20%-plus customer) for 22nm inspection/metrology has materially impacted our prior Outperform thesis. When we upgraded NANO in Aug 2009 (at $3.55) on the company's success in wresting INTC's 22nm thin-film/OCD metrology biz away from KLA-Tencor

. However, a recent turn of events suggests that technical issues during INTC's 22nm pilot production runs with NANO's tool have driven INTC back to KLAC, at least for thin-film/OCD metrology in litho. While checks suggest NANO will hang onto thin-film/OCD in the etch bay, we estimate the setback equates to ~40 tools, or ~$30M in 2011. Accordingly, we are lowering our FY11 EPS estimate to $0.90.” They added, “Justifying our Perform rating (vs. Underperform) is the potential for partial offsets: 1) ramp in UniFire for INTC back-end, 2) OCD metrology win at Toshiba and 3) revival of overlay metrology. However, there are already questions on the semi cycle, and share loss makes a specific stock even more questionable.”