Friday, December 01, 2006

Citigroup Analyst Comments on Novellus Systems (NVLS) Takeover Chatter

Citigroup analyst, Timothy Arcuri, comments on Novellus Systems (Nasdaq: NVLS): "While a private equity deal here can't be ruled out, necessary hurdle rates for returns remain difficult to achieve based on our work. Rather, we feel an acquisition by a peer such as Tokyo Electron - while risky - is more likely at this point and we now feel the probability of NVLS being acquired in the next 1-2Qs is at least 50%."

Arcuri continued, "While a deal would clearly move the stock higher, absent this factor, the fundamental margin story here has played out and shares are now under some pressure in core businesses such as CVD. We thus maintain Hold, $32 price target."

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