| KLA-Tencor Corp. (KLAC) is expected to report Q1 earnings after the market close on Thursday, October 29 with a conference call scheduled for 5 pm ET. The consensus estimate is 2c for EPS and $332.32M for revenue, according to First Call. Guidance provided during last earnings call was: orders up 0%-20%, or $327M-$392M, revenues up 5% to 19% or $295M-$335M, gross margins flat to up slightly from 45.1%, operating expenses down slightly from $150M, tax rate 30% and EPS ($0.10)-$0.00. Then on September 9 the company updated guidance at a Street conference for orders and revenues at the higher end of guidance or better, and EPS break even or better. RBC Capital Markets is modeling orders up 25% and revenues/EPS of $344M/6c. The firm believes the upward estimates revision following the earnings call is priced into the stock following strong guidance from competitors Novellus (NVLS) and Lam Research (LRCX). For Q2: Based on RBC's expectations of continued strength in foundry segment, they expect KLA-Tencor to guide orders up about 15%. They expect the company to meet their Q2 estimate of $420M and 27c. Consensus for Q2: $372M and 10c. RBC's estimates assume gross margin of 52.1% and operating expenses of $146.3M, slightly higher than the company's target of $140M-$145M by Q2. While near term fundamentals for the sector remain positive, muted guidance from several semiconductor companies will be a headwind for the semicap sector, notes RBC. Considering strong out performance for KLA-Tencor, up 72% YTD with respect to the SOX up 57% and peer Applied Materials (AMAT) up 33%, RBC Capital recommends a long AMAT, short KLAC pair trade through AMAT's earnings call on November 11, as they expect some level of reversion. RBC maintains their Underperform rating on KLA-Tencor due to sub-par growth in process control, lack of green field fab projects, premium valuation, and risk to the margin model. :theflyonthewall.com |
Subscribe for More Information