Hermes Microvision (HMI, 漢微科) shares staged a technical rebound to close 4.89 percent higher, at NT$1,180, on the GRETAI Securities Market yesterday, after falling by the daily limit on Thursday. Investors also gained confidence in the stock after Barclays Capital Securities and Deutsche Bank maintained their positive views toward the company.
The semiconductor equipment maker had seen its share price correct by nearly 20 percent since peaking in April, but Barclays and Deutsche Bank said the company’s fundamentals remain strong in terms of its customer base and industry leadership. The firm supplies electron-beam wafer inspection equipment to chipmakers.
Hermes Microvision shares hit their highest level in the company’s history — NT$1,480 — on April 8, but have fallen consistently since then amid weak market sentiment.
Investors became wary about the company’s sales outlook for the third quarter in the face of a potential order slowdown from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) regarding new inspection tools for the 16 nanometer (nm) process.
The slide in share prices also came amid market speculation that Hermes Microvision might be acquired by US-based Applied Materials Inc at a discount.
“We have seen no changes to HMI’s fundamentals and nothing to shift our outlook for 2014 and 2015, which remains firm,” Barclays Capital analysts Sebastian Hou (侯明孝) and Andrew Lu (陸行之) said in a client note.
The brokerage therefore has kept its “overweight” rating on Hermes Microvision unchanged, along with a 12-month price target of NT$2,000.
“We remain positive on HMI’s market share gain in the wafer inspection tool market and its dominant position in the e-beam tool market in 2014-16,” Deutsche Bank analysts Kevin Wang and Michael Chou (周立中) said in another note, retaining their “buy” rating with a price target of NT$1,600.
Hermes Microvision holds more than 85 percent of the global e-beam inspection equipment market. While optical inspection tools remain dominant, given their faster scanning speed, major foundries have shown an increasing demand for the e-beam wafer inspection tools to help improve their yield rate, as manufacturers reportedly plan to start 20nm production in the first half of this year and 16/14nm FinFET production early next year.
In the first five months of the year, Hermes Microvision reported NT$2.43 billion (US$80.9 million) in cumulative sales, up 15.87 percent from the same period last year, lagging behind market consensus.
In April, the company projected sales this year would grow between 25 and 30 percent from NT$5.34 billion last year.
However, analysts said that Hermes Microvision would show strong sales performance in the final quarter of the year, driven by semiconductor company orders of its 16/14nm inspection tools. Potential orders may come from TSMC, Samsung Electronics and GlobalFoundries Inc as they plan to build up their 16/14nm capacity, analysts said.
On a quarterly basis, the company is forecast to see sales flatten next quarter, after growing more than 50 percent this quarter, and might register a sales increase of up to 40 percent in the fourth quarter, Barclays Capital said.
However, Deutsche Bank predicted the company could see sales decline 10 percent next quarter, before posting a strong growth of 70 percent in the fourth quarter.
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