Novellus stock rose $5.88, or 14 percent, to $47.75 after Prudential analyst Shekhar Pramanick said in a note that the chip equipment maker's "September quarter orders could see growth of 13 to 15 percent over the June quarter. In our view, the company is likely to deliver one of the highest topline growths in 2000 and 2001, among its peers."
Pramanick, who already rates the stock a "strong buy," also gave it the title of "single best idea" in the chip equipment market. He cited a recent contract development with Intel that could bring Novellus about $80 million in revenue.
The analyst also advised investors to remain cautious about the sector, despite his praise for Novellus. "Given recent weakness in PC demand, lower DRAM prices and slowing handset growth, the semiconductor equipment stocks could see further downward pressure for the next few months," he wrote.
Chip stocks helped the Nasdaq scratch out a gain today. After dropping more than 70 points, the Nasdaq battled back to close up 67.27, or almost 2 percent, to 3,523.10.
Shares of other chip equipment makers also gained. KLA-Tencor rose $3 to $40.69, while Applied Materials closed up $2.56 at $54.19.
Among chipmakers, Advanced Micro Devices ticked up 81 cents to $24.50; Altera rose $4.63 to $51.06; Micron Technology climbed $3.88 to $46.94; and PMC-Sierra gained $10.69 to $209.94.
Chip stocks led today's rally; the Philadelphia semiconductor index rose 50.11, or 6 percent, to 863.06, a strong gain considering recent pessimism. The index lost 26 percent of its value in September.
Novellus has lost about 24 percent since the end of August and has traded within a range of $70.25 to $22.29 during the past 52 weeks.
The company is scheduled to announce third-quarter earnings Oct. 16 after the markets close. Wall Street expects Novellus to post earnings of 61 cents a share, the consensus estimate of 22 analysts surveyed by First Call/Thomson Financial. The company earned 18 cents during last year's third quarter.