Shares of chip equipment makers tumbled Friday after an analyst downgraded seven companies on concerns that an emerging rebound in demand won't be enough to meet a buildup in manufacturing capacity.
Citi analyst Timothy Arcuri lowered his rating to "Sell" from "Hold" on KLA-Tencor Corp., ATMI Inc., Brooks Automation Inc., Entegris Inc. and Advanced Energy Industries Inc.
He cut to "Hold" from "Buy" Novellus Systems Inc. and Applied Materials Inc. The analyst also removed Applied Materials from Citi's "Top Picks Live."
Arcuri sees the stocks at risk of falling about 30 percent in the next three to six months.
Furthermore, he said the sector is primed for a correction after rallying for more than a year.
Arcuri kept his "Sell" ratings on ASML Holding NV and Lam Research Corp. and maintained a "Buy" rating on FormFactor Inc.
Shares of KLA-Tencor fell $1.22, or 3.7 percent, to $31.63 in midday trading. ATMI was down 70 cents, or 3.9 percent, at $17.50, while Brooks fell 59 cents, or 6 percent, to $9.40.
Entegris Inc. declined 29 cents, or 6.1 percent, to $4.43 and Advanced Energy gave up 41 cents, or 2.6 percent, to $15.21. Novellus fell 72 cents, or 3.2 percent, to $21.41.
Applied Materials was down 43 cents, or 3.2 percent, at $13.15. ASML gave up 54 cents to $32.63, Lam Research fell $1.24, or 3.4 percent, to $35.25. FormFactor added 12 cents to $16.87.
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