Monday, Credit Suisse upgraded Novellus Systems, Inc. (NVLS) shares to Outperform from Neutral and increased its price target to $29 from $23.
Analyst Kumar is raising Samsung capex estimate; Leverage in model; Least embedded expectations. The analyst met company's CEO last week, and came away incrementally more comfortable with company's product positioning in CVD and PVD segments.
The analyst's channel checks following Samsung's annual supplier meeting in the bay area last week suggest Samsung will increase 2010 capex to ~$4.5 billion (up 50% year-over-year). DRAM prices have increased 210% off the bottom in fourth quarter of 2008, and NAND prices are up 300%.
The analyst noted that Samsung is looking to upgrade Line 10 (200mm) to 100K WSPM 300mm DRAM fab, and another line in Austin. In this cycle NVLS has excellent leverage to the key spenders - Samsung, TSM and Intel. NVLS is targeting ~50c in EPS at $300 million/quarter run rate - only SCE company that can grow EPS by 25% cycle to cycle, even if revenues compressed 25% from peak to peak.
The analyst added that NVLS is consolidating manufacturing in Tualatin, and will either sell or sub-lease several empty facilities in bay area, with the result that depreciation should fall from $12 million/quarter to $7-8 million over next 12 months, helping gross margins by 200bps.
The analyst said that NVLS only embeds a capex increase of 34% in 2010, versus as high as 45%+ for LRCX and VSEA. Thus while most SCE companies have good exposure to Samsung, the analyst prefers NVLS given least embedded expectations.
Currently, NVLS is up $0.51 or 2.49% and trading at $21.02.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.