The Nasdaq composite may have been repulsed Tuesday in its latest bid to close atop the 4,000 mark, but no one can blame tiny Tegal Corp.
Its shares soared 80% on optimism that the semiconductor-equipment maker has the potential to boost its sales to chip companies.
Tegal (TGAL) rose $4.63 to close at $10.44, its highest finish in more than two years. The stock climbed 74% on Monday after former mutual fund manager Glenn Cutler told the CBS MarketWatch Web site that Tegal could rise as high as $20 next year.
Worldwide chip sales are expected to rise 21% to $174 billion in 2000, driven by sales of chips used in communications equipment, according to the Semiconductor Industry Assn. Tegal and other companies that supply chip-making equipment are expected to benefit from the rise in demand.
"There's tremendous potential at Tegal," said Michael O'Brien, a SoundView Technology Group analyst, who nonetheless rates the stock a "hold."
Tegal, based north of San Francisco in Petaluma, Calif., faces "formidable competition" from rivals such as Applied Materials Inc., the biggest maker of equipment for the semiconductor industry, and Lam Research Corp., O'Brien said.
In its most recent quarter, Tegal registered sales of just $4.7 million, versus $1.6 billion for Applied Materials.
Other analysts also have a cautious outlook for the stock.
Indeed, Tegal was downgraded to "hold" from "accumulate" by Alex Woodward at Black & Co. amid Tuesday's run-up.
"CBS came out there, and the volume's really gone up," Woodward noted. "There's an awful lot of day trading going on. I haven't seen any change in the fundamentals of the company."
Day traders actively buy and sell stocks, often several times in the same day, with little or no regard for fundamentals such as company sales and earnings.
Tegal, founded in 1972, produces plasma etching systems used in making semiconductors. From 1978 to 1989, it was a wholly owned subsidiary of Motorola Inc., and in 1990 it was taken private in a leveraged buyout. Tegal went public in 1995.
The company lost $4 million, or 37 cents per share, in the latest quarter, which ended Sept. 30.
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Tegal Takes Off
Shares of Petaluma, Calif.-based Tegal Corp. have rocketed this week after a financial news Web site gave a bullish report on the chip equipment maker.
Weekly closes and latest on Nasdaq:
Tuesday: $10.44, up 4.63
Source: Bloomberg News