Novellus slides despite positive analyst comments

Novellus Systems shares fell $3.94, or 11 percent, to $30.94 Tuesday even though several analysts offered positive comments following its third-quarter earnings report.

In the quarter, Novellus earned $85.3 million, or 62 cents a share, on sales of $359.1 million.

First Call Corp. consensus expected it to earn 62 cents a share in the quarter.

Robertson Stephens analyst Sue Billat reiterated a "strong buy" recommendation on the stock Tuesday and raised its fiscal 2000 and fiscal 2001 earnings estimates to $2.33 a share and $3.32 a share, respectively.

"The company continues to build record bookings and backlog," Billat wrote in a research note. "We believe the book-to-bill was in line with the front-end industry average of 1.33 while backlog is exceeding the usual level of 1.5 times quarter shipment. Accordingly, we expect fourth quarter sales to increase significantly as Novellus ramps shipment to bring backlog down to more realistic levels."

Prudential Securities raised its fiscal 2001 sales estimate to $1.9 billion from $1.8 billion.

Goldman Sachs analyst Gunnar Miller raised his fiscal 2000 and fiscal 2001 earnings target to $2.34 a share and $3.15 a share, respectively.

ABN AMRO also raised its fiscal 2001 estimate to $3.40 a share to $3.20 a share due to "expectations of higher than previously anticipated sales of CVD and PVD equipment." It also reiterated its "buy" rating on the stock.

However, Chase H&Q's Eric Chen cut the stock from a "buy" rating to a "market performer."

The $359.1 million in sales marks a 132 percent improvement from the year-ago quarter when it earned $21.8 million, or 18 cents a share, on sales of $154.9 million.

"Record results for the quarter were driven both by market share gains with advanced technology and customer expansion with our ever increasing portfolio of new products," said CEO Richard Hill in a prepared release.

Last quarter, Novellus beat the Street when it posted a profit of $75.7 million, or 56 cents a share, on sales of $326 million.

Its shares moved up to a 52-week high of $70.25 in March after falling to a low of $22.63 last October.

Twenty-one of the 22 analysts following the stock rate it either a "buy" or "strong buy" recommendation.

First Call Corp. consensus expects it to earn $2.30 a share in the fiscal year.