Shares of several companies that make semiconductor equipment dropped Tuesday after a Barclays Capital analyst lowered ratings and earnings estimates due to weaker global demand for chips.
The analyst, C.J. Muse, wrote in a research note that he expects share prices for the sector to reach a low in the fourth quarter.
He cited falling pricing for some forms of computer memory, lower utilization rates in chip foundries and shrinking equipment orders from chipmakers.
"In hindsight, clearly the right call would have been to downgrade the group in April following the end of the Fed's quantitative easing, specter of increased government regulations, weakening picture in China — basically everything that has pressured global end demand," Muse wrote.
Muse cut earnings estimates and ratings for Brooks Automation Inc., Cymer Inc., KLA-Tencor Corp., LTX-Credence Corp. and Verigy Ltd.
The analyst also dropped his earnings estimates for Advanced Energy Industries Inc., Amkor Technology Inc., Applied Materials Inc., Lam Research Corp., MKS Instruments Inc., Novellus Systems Inc., Teradyne Inc. and Varian Semiconductor Equipment Associates Inc.
Investors sent shares of all the companies lower in trading Tuesday. Among the steepest declines:
Stock in Brooks Automation plunged 88 cents, or 13 percent, to close at $5.81.
Shares of LTX-Credence fell 23 cents, or 11 percent, to end trading at $1.85.
Amkor's stock dropped 42 cents, or 7.2 percent, to close at $5.40.
Cymer slipped $1.77, or 5.4 percent, to close at $30.88.
KLA-Tencor's shares dropped $1.69, or 5.6 percent, to close at $28.66.
MKS Instruments' shares decreased 82 cents, or 4.4 percent, to close at $17.94.
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