Cymer (Nasdaq: CYMI) makes
excimer light sources for manufacturers of photolithography tools in the semiconductor equipment industry. It offers field support products, customized to support chipmaker customers in their advanced wafer patterning processes. It also provides deep ultraviolet light sources to lithography tool makers, who integrate the sources into their wafer steppers and scanners for subsequent sale to chipmakers. Cymer has installed more than 3,000 light sources around the world, in plants run by the likes of Advanced Micro Devices (NYSE: AMD), IBM (NYSE: IBM), Intel (NASDAQ: INTC) and Texas Instruments (NYSE: TXN).
Investors were pleased earlier in the week, when the firm announced a $100 million buyback program and then issued a solid quarterly summary. Cymer reported Q1 EPS of 41 cents and revenues of $124 million. Analysts had been looking for 35 cents and $119.3 million. Management also said Q2 revenues would be comparable to the Q1 total of $124 million ($116.6M consensus) and that gross margins would hold at approximately 48%.
CYMI shares
popped on the news and have since been consolidating the gain in a bullish "pennant" pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with two "strong buys", five "buys" and three "underperforms". Analysts see a 35% growth rate, through the next year. The CYMI P/E ratio (11.47), Price to Sales ratio (1.61), Price to Book ratio (1.63), Price to Cash Flow ratio (8.09), Price to Free Cash Flow ratio (9.41) and Operating Margin (20.01%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. Over the past 52 weeks, the stock has traded between $22.86 and $44.73. A stop-loss of $23.90 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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