Tuesday, October 26, 2010

LED Stocks: FAIL (for now) Veeco Reports, UBS, JPM, Citi Like, Market Doesn't (VECO)

The stock is trading down $2.00 at $37.94.
From the Wall Street Journal: 
Veeco Instruments' 3Q Profit Soars, But Stock Slides
From SmarTrend:
UBS Boosts Estimates Of Veeco Instruments Following Earnings (VECO)
UBS issued a note to clients discussing Veeco Instruments (NASDAQ:VECO) earnings report saying that its "China orders offset weak Korean orders."

UBS analyst Stephen Chin said, "Veeco reported 3Q10 sales & EPS of $277M and $1.46 versus its guidance of $268M and $1.23. But, Veeco's total 3Q10 orders declined -10% q/q to $278M as we believe its LED equipment order total from Korean customers was $0 (we estimated $25M) versus $100M last quarter. Despite Korean LED orders likely at $0 again in 4Q10, Veeco guided 4Q10 orders flat to up q/q given continued strength from China, which we estimate grows to 80% of Veeco's total LED orders."

Chin went onto say, "Veeco's 3Q10 had LED orders from 15 total customers including 9 from China and 4 from Taiwan. We believe Veeco's LED orders from China are sustainable as Veeco is tracking at 15+ LED fabs in China which need LED equipment next year." ...MORE
From Notable Calls:
Veeco Instruments (NASDAQ:VECO): Colour on quarter - Bounce?
Everyone looooves Veeco Instruments (NASDAQ:VECO). Ok, not everyone. Shorts hate it. But the MOCVD equipment maker's hot love affair with the analyst community continues even after the co posted in-line results and slightly worse than expected order guidance last night.

- J.P. Morgan reits their Overweight rating and $75 target noting exceptional margins, large backlog, and strong demand from China offsetting modest weakness in Korea.

- UBS's Stephen Chin reits Buy and $54 price target saying Veeco reported all-time record high margins and EPS and guided higher again in 4Q10 despite disruptive Korean customer shipment rescheduling from 4Q10 into 1Q11 and zero new Korean LED tool orders in 3Q10 and 4Q10.

Veeco guided 2011 sales to be higher than $1B, which suggests 2011 EPS should be higher than $4.74, compared to consensus at $4.67.

Chin estimates Veeco’s net cash balance will be about $600M, which is $14/share, at the end of the Dec-10 quarter, assuming Veeco does not spend any of its net cash on the remaining $168M in its stock buyback program.

- Citigroup reits Buy and $52 target noting that following their Asia trip, they haven’t been overly excited about the near-term set-up here given what is now a transitional phase of order/backlog choppiness. Indeed, with a slightly disappointing order number, the stock is apt to trade off and remain range-bound in the near term especially if they are right about orders being down another ~20% Q/Q in CQ1. More broadly, however, even if China only took ~325 tools in 2011 versus what appears now to be ~550-575 (acknowledging the speculative nature of a portion of shipments into China), Citi estimates VECO still earns ~$4.30 in C2011. This is just slightly lower than Street $4.70....MORE