Shares of Applied Materials Inc. slumped 1.8% in premarket trade Monday, and of Lam Research Corp. dropped 1.6%, after the chip equipment makers were downgraded at RBC Capital Markets, citing declines in dynamic random-access memory capital expenditures and a drop in NAND spending. Analyst Mahesh Sanganeria cut ratings for both companies to underperform from sector perform. His stock price target for Applied Materials was lowered to $12, or 20% below Friday's closing level, from $16, and for Lam Research to $52, or 21% below Friday's close, from $76. Sanganeria expects a 38% drop in DRAM and 17% fall in NAND capex in 2016, and flattish foundry spending. Shares of Applied Materials have lost 24% and Lam Research dropped 21% over the last three months through Friday, while the PHLX Semiconductor Index declined 11% and the S&P 500 has slipped 6%.
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