Barclays on U.S. Display & Lighting: Display & Lighting - GTC Day 1 Recap
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Barclays on U.S. Display & Lighting: Display & Lighting - GTC Day 1 Recap
Analyst, Olga Levinzon, said, "Overall, the key takeaways from the first day of our BarCap Global Tech Conference were largely consistent with our outlook for the Display & Lighting sector. Specifically: 1) fiber lasers appear to be facing greater macro headwinds in 1H12; 2) LCD capacity investments continue to contract as a result of the current industry oversupply; 3) OLED investment continues to be the focal point for several customers; and 4) the MOCVD market is running at very low order levels. We outline our segment-specific thoughts below, and maintain our neutral outlook on the overall Display & Lighting sector, with Corning (NYSE: GLW) as our top pick."
Fiber Lasers: IPG Photonics (Nasdaq: IPGP) reset expectations for the 1H12 fiber laser trajectory, suggesting that macro headwinds worldwide and slowing industrial spending should drive modest 1Q12 revenue growth of +5-10% Y/Y, implying revenues of ~$105-110M vs. our/consensus estimate of $123.5M (-4% Q/Q and +24% Y/Y). This caused a pullback in the stock...we see shares remaining range-bound in the near term."
LED Equipment: While formal presentations from MOCVD leaders Veeco (Nasdaq: VECO) and Aixtron (Nasdaq: AIXG) are scheduled for today, we note that commentary from select subsystem suppliers to the space confirms our expectations for a significant decline in MOCVD orders in the coming quarters. Interestingly, activity from some of the new Chinese MOCVD entrants (we believe AMEC and Yangzhou Longya) has picked up in recent months, though we believe this represents initial tool shipments to affiliated Chinese LED customers rather than real traction with the tools. We continue to expect MOCVD industry shipments to drop to ~400 tools in 2012, with a modest recovery to ~440 in 2013, and anticipate that VECO and AIXG will largely maintain their duopoly structure."
"LCD and PCB Equipment: Orbotech (Nasdaq: ORBK) discussed a likely pull-back in LCD capacity investments in 2012, pointing to the current sell-side expectations for a 60% drop in LCD-specific capex in 2012 (note we currently model LCD capex down 10-15%, though this includes LTPS). Key spenders include BOE, Chinastar, and potentially Samsung's China fab. Importantly, while bookings appear to be near trough levels currently (as evidenced in Applied Material's (Nasdaq: AMAT) results), management anticipates an order recovery in 1H12."
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Analyst, Olga Levinzon, said, "Overall, the key takeaways from the first day of our BarCap Global Tech Conference were largely consistent with our outlook for the Display & Lighting sector. Specifically: 1) fiber lasers appear to be facing greater macro headwinds in 1H12; 2) LCD capacity investments continue to contract as a result of the current industry oversupply; 3) OLED investment continues to be the focal point for several customers; and 4) the MOCVD market is running at very low order levels. We outline our segment-specific thoughts below, and maintain our neutral outlook on the overall Display & Lighting sector, with Corning (NYSE: GLW) as our top pick."
Fiber Lasers: IPG Photonics (Nasdaq: IPGP) reset expectations for the 1H12 fiber laser trajectory, suggesting that macro headwinds worldwide and slowing industrial spending should drive modest 1Q12 revenue growth of +5-10% Y/Y, implying revenues of ~$105-110M vs. our/consensus estimate of $123.5M (-4% Q/Q and +24% Y/Y). This caused a pullback in the stock...we see shares remaining range-bound in the near term."
LED Equipment: While formal presentations from MOCVD leaders Veeco (Nasdaq: VECO) and Aixtron (Nasdaq: AIXG) are scheduled for today, we note that commentary from select subsystem suppliers to the space confirms our expectations for a significant decline in MOCVD orders in the coming quarters. Interestingly, activity from some of the new Chinese MOCVD entrants (we believe AMEC and Yangzhou Longya) has picked up in recent months, though we believe this represents initial tool shipments to affiliated Chinese LED customers rather than real traction with the tools. We continue to expect MOCVD industry shipments to drop to ~400 tools in 2012, with a modest recovery to ~440 in 2013, and anticipate that VECO and AIXG will largely maintain their duopoly structure."
"LCD and PCB Equipment: Orbotech (Nasdaq: ORBK) discussed a likely pull-back in LCD capacity investments in 2012, pointing to the current sell-side expectations for a 60% drop in LCD-specific capex in 2012 (note we currently model LCD capex down 10-15%, though this includes LTPS). Key spenders include BOE, Chinastar, and potentially Samsung's China fab. Importantly, while bookings appear to be near trough levels currently (as evidenced in Applied Material's (Nasdaq: AMAT) results), management anticipates an order recovery in 1H12."
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