UPDATE: Citigroup Reiterates Buy Rating, Lowers PT on KLA-Tencor Corporation
In a report published Wednesday, Citigroup reiterated its Buy rating on KLA-Tencor Corporation (NASDAQ: KLAC), but lowered its price target from $66.00 to $61.00.
Citigroup noted, “KLAC's strongest customer engagement is TSMC. Citi TSMC analyst Roland Shu expects TSMC to expand 28nm by 40k, and install 30k of 20nm capacity by end-2013 (in part to woo potential 20nm quad-core AP business from Apple). Such an aggressive node ramp under crucial customer circumstances reinforces our view that KLAC is the largest beneficiary from Apple's foundry realignment...We reduce our KLAC target price to $61 from $66. Our former $66 target price reflected a 9x P/E applied to our former $5.93, adding back $12.50 net cash. Our updated $61 target price reflects a 10x P/E applied to our new $4.84 C13E EPS estimate, adding back $12.50. We opt to use a 10x P/E multiple versus our prior 9x P/E multiple to reflect increasing critical important of process diagnostics and control as foundry migrates to 20nm from 28nm.”
KLA-Tencor Corporation closed on Tuesday at $50.85.
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