Tokyo Electron initiated with a Neutral at New Street

New Street initiated coverage of Tokyo Electron (TOELY) with a Neutral rating and 22,600 yen price target. In its Semicap sector initiation, the firm said it sees “excellent” fundamentals” and likes the long-term outlook, but adds that it sees two years of muted growth ahead. In this near-term context, the firm argues that KLA (KLAC) has “room to outperform” as it combines the lowest exposure to the trailing edge and the highest exposure to the leading edge and DRAM. The firm is cautious on ASML (ASML), Applied Materials (AMAT) and Tokyo Electron, which it says all have higher exposure to the trailing edge, and it adds that while Lam Research (LRCX) is primarily exposed to memory, the early recovery is “reflected in expectations already.”