Analyst James Covello says the downgrade is about a potential pause in the semi cycle, nothing company-specific. He says since February, the average stock in his universe has outperformed the Nasdaq by nearly 30%.
He says given near-term fundamental concerns and stock outperformance, he feels more comfortable on the sidelines until a clearer end-demand picture emerges, giving him better visibility into a continued second-half recovery. Covello believes a pause in order growth could occur as foundry customers digest capacity additions that have accounted for much of the recent uptick in orders.
Covello downgraded Applied Material (AMAT
), Advanced Energy Industries (AEIS
), ATMI (ATMI
), Axcelis Technologies (ACLS
), KLA-Tencor (KLAC
), Lam Research (LRCX
), Novellus (NVLS
) and Teradyne (TER