Cramer: Downgrades Make No Sense
Off the Ford downgrade, Jim Cramer plays offense.

Click here to watch the video.

Goldman Sachs said it is cutting its rating on Novellus (NVLS) to Sell from Neutral based on expected order declines. Recent analysis of DRAM supplies and spending indicates that fundamentals will remain weak in 2008, with significant oversupply during the first half of the year. Price target at $20.

Novellus Systems Inc. said last week its board approved an additional $1 billion in stock repurchases.

San Jose-based Novellus said that adds to the about $300 million remaining under the previously authorized program.

"We remain confident in our technology and productivity-leading position today and its competitiveness into the future," said Richard S. Hill, chairman and chief executive. "We believe that our common stock repurchase program is an excellent use of excess cash from operations to increase shareholder value."

The stock trades for 6x cash flow.

Novellus Systems (NVLS) was upgraded to Neutral rating from Sell at UBS. Price target lifts at $30 from $28 while FY 2008 eps estimates holds at $1.65.

covered call writing

Morgan Stanley upgrades Novellus (NVLS) from underweight to equalweight, but lowers price target from $35 to $32.

SEP07 32.5 Put
1.50/contract

Upgraded by Matrix Research from Buy to Strong Buy

Downgraded by Lehman Brothers from Overweight to Equal-weight

Novellus is one of the smaller players in the semi conductor equipment space but with no debt and significant cash flow you have to wonder why they are not private.

sold