By George Glover
Chip equipment stocks are going through a rough patch -- but that's created a buying opportunity, according to Citi.
Analyst Atif Malik said in a research note published Monday the sector now looks attractive after a "sharp correction" over the second half of the year, when weak demand from China and for consumer devices such as smartphones dragged on share prices.
He added that "risk-reward appears skewed to the upside" because many chip equipment stocks now trade at a discount to both the benchmark S&P 500 and the PHLX Semiconductor Index, which tracks the broader semiconductor sector.
The "Big Three" chip equipment makers are KLA, Applied Materials, and Lam Research -- but Malik has tipped five under-the-radar stocks to also benefit from the end of what he called a "cyclical trough."
He upgraded Advanced Energy Industries, FormFactor, MKS Instruments, Nova, and Veeco Instruments to a Buy rating, setting price targets that imply each of them can rack up double-digit gains.
Write to George Glover at george.glover@dowjones.com
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(END) Dow Jones Newswires
January 06, 2025 08:18 ET (13:18 GMT)
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