Citigroup Upgrades AMKR and TER To Buy

Citigroup has published a research report on Amkor Technology

and Teradyne, Inc.

and has upgraded both companies to Buy. In the report, Citigroup writes "We see three key positives driving a potentially very bullish set-up out the other side of the correction: 1) EPS/cash flow should prove more resilient (especially surprising for AMKR) and companies should still make a lot of money resulting in a re-valuation based on higher “cross-cycle” EPS (much like 2004 but likely more dramatic), 2) chipmakers are now faced w/more capital-intensive “shrinks” as the next wafer size (450mm) is years away; and 3) key factors driving back-end test buy-rate compression have run their course. While these are positive for the entire sector, front-end orders still have ~40-50% risk during 1H:11 while the battle in the back-end is much easier to fight given how much orders are already down. Additionally, back-end stocks are no more expensive than front-end relative to trading levels the past few years so risk appears much lower." Citigroup has upgraded Amkor from Sell to Buy and has increased the price target from $6 to $10 and has upgraded Teradyne from Hold to Buy and has increased the price target from $13 to $17. Amkor Technology and Teradyne, Inc. closed Friday at $6.47 and $11.86, respectively.