CIBC Ups KLA-Tencor to Outperform

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OCTOBER 22, 2004

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WORD ON THE STREET

CIBC Ups KLA-Tencor to Outperform
Analyst Ali Trani sees strong demand and favorable product mix for the chip-equipment maker

CIBC World upgrades chip-equipment maker KLA-Tencor (KLAC ) to outperform from sector perform.

Analyst Ali Irani says the first-quarter upside and flat sequential second-quarter guidance confirm to him that the chip-equipment maker can buck a current downdraft in tooling as it benefits from a robust backlog, stronger-than-average demand for its process diagnostic and control (PDC) equipment and a favorable product mix shifts into 90nm chips.

Irani notes, with little competition in PDC, and thus superior pricing power, KLA-Tencor is benefiting from challenging fabrication migrations to 90nm chips and a rising number of 65nm pilot lines that require earlier demand for its newest tool-sets.

Trani sees $2.26 fiscal 2005 (Jun) earnings per share, and ups his $54 price target to $66.

All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report.
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