UPDATE: Credit Suisse Lowering Price Target On Novellus Systems

Credit Suisse is lowering its price target on shares of Novellus Systems NVLS to $40 from $44, but it still has an Outperform rating on shares after it reported earnings. In a note to clients, Credit Suisse writes, "Consistent with our preview two weeks ago, foundry weakness is driving a mid-cycle order correction, albeit a tad more severe of down 10% q/q order guidance for Q3, vs our preview of down 5%. Given slightly better sentiment on the group last week or so, this could impact stocks near term. However, we note: (i) Typical mid-cycle order correction is down 20-35% - NVLS Q3 order guidance implies down 30-40% from Q1 peak; (ii) Orders in Q3 are correcting to ~$24bb run-rate, below our view of normalized capex levels of $30-$34bb; (iii) Push-outs will make compares easier for 2012 and keep supply additions in check with demand; (iv) Visibility for orders is low for SCE management - this is sometimes a contra indicator; (v) Our new ~$3 EPS in CY11/CY12 drives our target price of $40, we do not expect there should be significant downside unless macro weakens further." Shares of NVLS are down $1.75 in pre-market trading to $34.02, a loss of 4.89%.