Goldman's China LED Play; Buy Cree (CREE) Sell Veeco Instruments (VECO)

December 18, 2012 3:20 PM EST
Get Alerts VECO Hot Sheet
Price: $27.10 -0.18%

Rating Summary:
    15 Buy, 16 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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After performing a dept-dive into China's LED market, Goldman Sachs is recommending investors buy shares of Cree (Nasdaq: CREE) and sell shares of Veeco Instruments (Nasdaq: VECO).

"We estimate Cree owns roughly 50% of the outdoor LED streetlighting market in China given its strong market share at leading domestic street lighting solution providers (e.g., Kingsun). Following a slight lull in growth in 2012, we expect LED streetlighting demand in China will accelerate in 2013 to more than double to 4.5 mn units, with an overall unit CAGR of 66% through the end of 2015," said analyst Brian Lee.

Lee sees weakness in metal organic chemical vapor deposition (MOCVD) and is reducing 2013 and 2014 estimates. As a result of lower volume, he lowered Veeco 2013 and 2014 EPS estimates to $1.00/$1.30 from $1.15/$1.55 prior.

Goldman has a Sell rating on Veeco with a modified price target of $24 (from $25).

Goldman has a Buy rating on Cree.

For an analyst ratings summary and ratings history on Veeco Instruments Inc. click here. For more ratings news on Veeco Instruments Inc. click here.

Shares of Veeco Instruments Inc. closed at $29.17 yesterday.

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