Novellus jump as analyst sees likely design win

Shares of Novellus Systems Inc. advanced Tuesday after an RBC Capital Markets analyst upgraded the chip manufacturing equipment maker, saying it likely won a "significant" design contract at a large memory chip customer.

Analyst Mahesh Sanganeria raised his rating on Novellus to "Top Pick," a notch above the already bullish previous rating of "Outperform."

Sanganeria did not identify the company Novellus likely secured a contract with. But he said "this design win sets up the company for market share improvement from near 5 percent to the vicinity of 30 percent" in the roughly $1 billion PVD or "physical vapor deposition" market.

Physical vapor deposition is a process used during semiconductor production. According to Capital IQ, customers of Novellus include Intel Corp. and Samsung Electronics Co.

The analyst raised his first-quarter profit estimate to 41 cents per share from 39 cents per share, and his second-quarter forecast to 44 cents per share from 30 cents per share.

Analysts polled by Thomson Reuters expect a first-quarter profit of 33 cents per share and a second-quarter profit of 35 cents per share.

Shares of San Jose, Calif.-based Novellus rose $1.06, or 4.9 percent, to $22.50 in midday trading. In the past 52 weeks, the stock has traded between $11.43 and $26.