Photronics Continues to Fall
Photronics (PLAB - Snapshot Report) is an OEM [original equipment manufacturer] of photomasks used by the semiconductor manufacturing industry in the fabrication of IC devices and LCD displays. In the July quarter, the top and bottom-line results were in line with the company's preannouncement.
Since foundries build in their own photomasks in the larger geometries, the more advanced nodes are that much more important. The company has strong technical development capabilities, and is experiencing growth in its 130nm and 90nm product lines. In the near term, this growth will not outshine a maturing legacy product and soft markets. Consequently, we rate shares of PLAB a Sell.
Despite the share price dropping approximately 61% off the 52-week high, the successful completion of an equity offering and the continued pay-down of debt, we prefer to be on the sidelines until the Flat Panel Display markets pick up. Consequently, we rate the shares of PLAB a Sell rating and taking our price target down to $1.50 from $5.00.