Wednesday, September 1, 2010

LEDs: Kaufman Sets Buys On Veeco, Aixtron; Starts Cree At Hold (AIXG; CREE; VECO)

From Tech Trader Daily:
Kaufman Bros. analyst Jeffrey Bencik this morning picked up coverage of the LED lighting sector, starting Cree (CREE) with a Hold rating, while setting Buy ratings on Veeco (VECO) and Aixtron (AIXG).
Here’s an quick rundown on his thinking on the stocks:
  • Cree: He sets a $58 price target, modestly above yesterday’s close at $53.54. “As a technology leader in the space and a pure-play on the growth in the LED market, we believe CREE deserves a premium multiple; however, we do not feel comfortable increasing the multiple to the high end of the range and would look to see earnings acceleration above our forecasts to become more constructive on the name.” He notes that his target represents 25x expected 2011 EPS.
  • Veeco: He sets a $56 target, compared to yesterday’s close at $33.23. “VECO is trading near historic low valuations of 7.5x consensus estimates for 2011 and only 6x our estimate,” he writes. “Excluding cash [about $10 a share], the company would be trading at only 5x the consensus estimate. This is actually below its prior record low valuation. The market is betting that the industry is at the peak of the cycle, but, in our opinion, the industry is just starting to benefit from what will likely be an extended ramp in demand for LEDs as the backlighting mini-cycle turns into the general lighting super cycle.”...MORE