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Novellus rallies on earnings, upgrades

Shares of Novellus Systems (Nasdaq: NVLS) jumped 3 11/32, or 5 percent, to 75 13/16 Tuesday, one day after it topped analysts' estimates by more than 17 percent in its third quarter.

The San Jose, Calif.-based maker of chip making equipment reported a profit of 54 cents per share, of $21.8 million. First Call's survey of 22 analysts predicted net income of 46 cents per share for the quarter ended Sept. 25.

Third quarter sales rose to $154.9 million, up 45 percent year-over-year and up 18 percent sequentially. A broad recovery in the chip industry is driving business, said Richard Hill, chairman and CEO.

On Tuesday, Banc of America Securities raised its rating from a "buy" to "strong buy" while Bear Stearns lifted it from an "attractive" recommendation to a "buy."

Hill also credited an recent company restructuring for improving results. "We have realigned our corporate structure to increase focus on our customers' critical process integration issues and provide a framework for future corporate growth," he said.

Cash rose to $354.2 million from $345.3 million in the second quarter. The company said it booked more orders than it filled for the fourth straight quarter.

Shares of Novellus gained 2 31/32 to 72 15/32 in Monday's regular trading prior to the earnings report. Among 22 Wall Street firms surveyed by Zack's Investment Research, a dozen rank Novellus the equivalent of a "moderate buy", seven recommend it as a "strong buy" and two maintain "hold" ratings on the stock.>