Zacks Investment Research downgraded shares of KLA-Tencor Corporation (KLAC) from NEUTRAL to UNDERPERFORM on December 20, 2012, with a target price of $44.00.
KLA is one of the leading suppliers of inspection and metrology products and services. The company's fiscal first quarter results missed the Zacks Consensus with forward guidance also disappointing. This was mainly because KLA is greatly exposed to the foundry segment, which has now been hit by uncertain demand for mobile devices. However, KLA's comprehensive product line, cost reduction initiatives and strong balance sheet remain positives that will generate growth whenever cyclical pressures permit. Of course, the rising competition and concentrated customer base increase execution risk. We are downgrading KLAC shares to Underperform, since material increase in revenues is unlikely in the current environment.
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