KLA-Tencor Upgraded At Oppenheimer

NEW YORK (AP) — Oppenheimer & Co. upgraded KLA-Tencor Corp. on Thursday, predicting a sales recovery heading into next year.

In a client note, Oppenheimer analyst Gary Hsueh said there are "early indications the cyclical recovery ... is blossoming into a real upturn."

He upgraded KLA-Tencor, a Milpitas, Calif. company that makes equipment for chip manufacturers, to "Perform," from "Underperform" and raised his price target to $37 from $27.

Along with a broader recovery for the sector, Hsueh said his concern that rival Applied Materials Inc. was taking market share from KLA-Tencor in its highest margin business "has finally fizzled."

Given a "stabilizing" market share, the company could achieve an operating margin of 20 percent to 25 percent of revenue, Hsueh said.

He estimates that revenue for the quarter ending this month is tracking at $350 million. Analysts polled by Thomson Reuters expect $324 million, on average.

KLA-Tencor shares nevertheless declined Thursday with the broader market, down 70 cents, or 2 percent, to $34.95 in afternoon trading.