Needham & Company Cuts Price Target on Photronics, Inc. (PLAB) Following a Negative 1Q Preannouncement

Needham & Company maintained a Buy rating on Photronics (NASDAQ: PLAB), and cut the price target to $13.00 (from $14.00), following the company's 1Q preannouncement. PLAB lowered F1Q revenue guidance from $133-$143MM to $128-$130MM and tightened NG EPS range from $0.14-$0.23 to the lower-end at $0.15-$0.17. The updated guidance implies GM likely moderate to 29-30%, which is inline with its model when volume reduced.

Analyst Edwin Mok commented, "Before market open, PLAB negatively preannounced F1Q16 (Jan) due to lower demand in high-end IC and below seasonal weakness in mainstream IC. We believe the weakness can be attributed to the lumpiness and timing of customers orders, which are more transitional and a near-term issue. Despite the weaker outlook and cutting estimates, we continue to believe PLAB's improved market position in the consolidated photomask space is posed to deliver greater growth and higher profitability. With strong cash flow generation and the end of the Micron [Hold] agreement bringing in additional capital, we believe PLAB is in a strong financial position to capitalize on several opportunities even if macros turn sour. Maintain our Buy but trim our PT to $13 on lower estimates and a more conservative multiple."

For an analyst ratings summary and ratings history on Photronics click here. For more ratings news on Photronics click here.

Shares of Photronics closed at $11.16 yesterday.

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