Newly Favorable on ASM Int'l

ASM International  (ASMI - Analyst Report) is an OEM [original equipment manufacturer] of both front-end and back-end semiconductor manufacturing equipment. The back-end business has gained significant momentum in the past two years, while the front-end business has struggled to become profitable.

On June 6, 2008, Applied Materials Inc. (AMAT - Snapshot Report) offered to buy two of ASM's units for $400 million to $500 million. ASM plans to respond to the bid by June 14. The break-up value of the firm could be $30.00 per share. We rate the shares of ASMI a Buy.

ASMI currently trades at a 13.7x multiple of our fiscal 2009 earnings estimate (P/E). The company has a unique position in the semiconductor manufacturing equipment market. ASMI has a growing presence in Asia. ASMI shares should benefit from the growth in 300mm orders, which is likely to be sustained in the foreseeable future.

Read the full analyst report on AMAT