) to equal-weight from overweight.
Analyst Ted Berg says the sell-off in shares reduced Cabot's valuation, but believes investors may be better served sitting on sideline, at least until we can get greater clarity on market share, pricing, and profitability trends.
He notes while competitors' gains at 90nm is well documented, he's concerned with what appears to be cracks forming in the company's core market share at 130nm. He believes pricing trends could weaken more than expected, leading to weaker margins.
Berg sees slower growth in Cabot's served market, and weaker free cash this year due to a much higher capital expenditure. He cuts his $42 target to $34.