Janney Montgomery Scott Initiates Coverage on Veeco Instruments (VECO) with a Sell

November 7, 2008 9:13 AM EST

Janney Montgomery Scott initiates coverage on Veeco Instruments (Nasdaq: VECO) with a Sell. Price target $6.

Janney analyst says, "While we like the company’s products and position in the long-term, the outlook for its markets in 2009 is difficult. Its customers look to be reducing capex because their end markets are weakening significantly. Given the strength in the first half of 2008, we do not expect customers to be buying much equipment for capacity increases, and in an uncertain economic environment we believe technology improvement purchases will get delayed. This lack of clarity has led Veeco to (a) refrain from giving booking guidance for 4Q:08 (which it usually does) and to (b) announce that it expects to cut costs in 2009 in order to lower its breakeven point (layoffs announced this week). We are modeling a trough in revenues of $93.5 million and trough gross margins of 38.5% in the 2Q:09,
with a rebound in 2010."

Veeco Instruments Inc. (Veeco) designs, manufactures, markets and services a line of equipment primarily used by manufacturers in the data storage, high-brightness light emitting diode (HB-LED), solar, wireless and semiconductor industries.

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