Jefferies Reiterates PT and Rating on Kulicke & Soffa

Jefferies has published a report on Kulicke & Soffa reiterating the rating and price target for the semiconductor company. In the report, Jefferies wrote, "A marked slowdown in wedge bonder shipments needs attention (Gross margindilution) which impacts concurrent with a wider semis peak. That said, the transition to copper bonding is a multi-year secular theme (2-3 years) within which KLIC has established a sizable lead on rivals, and we expect this to continue to hold up the order book into 2H11 and much of 2012. FY3Q11: Sales were ahead of expectations at $294m (prev j/est $259m), up an eyewatering 42% q/q (gdce: $255-275m) with an order book of just over $250m. The guidance for a decline in sales was lower than we had forecast ($155-175m sales) and sees gdce of 6-8% growth y/y for FY11. Wedge bonders dropped a hefty 32% q/q implying a blowout quarter for wire bonders (up 70% q/q). As flagged by rivals, we believe that we are amidst a capital equipment slowdown in back-end equipment (wedge and ball) as a fast declining semis spend environment impacts. The slowdown in OSAT spending does need further investigation, however, we expect any decline in order pattern for the next 2-3 quarters to be at a gentler pace than seen in other semis-driven slowdowns given KLIC's secular driver – the transition to copper based wire bonding." Jefferies rated Kulicke & Soffa a Buy with a price target of $12.00. Kulicke & Soffa closed Tuesday at $8.63.