Deutsche Bank Downgrades KLA-Tencor; Stock Falls

Analysts at Deutsche Bank

downgraded shares of KLA-Tencor

from Hold to Sell on Monday morning, citing high expectations for the stock. They wrote, "With shares trading near 52-week highs, at a premium valuation and considering high investor recommendations, we recommend investors take profits as we see downside to ~$40-$45 levels." The firm has a $44.00 price target on the stock, down from its previous target of $56.00. The analysts added that "We do not believe that consensus is accurately pricing the downside risk to KLAC's earnings in CY13. Currently the street expects CY13 EPS of $4.69, vs. our estimate of $4.13. Embedded in the street's earnings estimate is revenue growth of 6%, compared to our estimate of a 4% decline in revenue. Given the potential headwinds within foundry, slowing demand for process control (driven by better yields) and a slower than expected recovery in memory, we believe these estimates are overly optimistic." During Tuesday's trading session, KLAC was last trading down around 3% to $51.29. Year-to-date, the stock has risen a little better than 6%.