Needham & Company Remains Sidelined on Veeco Instruments (VECO) With Low Expectations for LED Industry in 2016

Needham & Company maintained a Hold rating on Veeco Instruments Inc. (NASDAQ: VECO). Needham expects the LED industry to continue to struggle in 2016, and after 2 years of growth and a weak finish exiting 2015, MOCVD shipments are expected to decline and reach a new bottom in 2016 below the 2013 cyclical low. The new generation of tools should have driven a replacement cycle for the industry, but demand has been disappointing due to weak LED pricing. Additionally, the tight credit environment in China has limited purchasing power, while doubling of productivity has effectively reduced the size of the market.

Analyst Edwin Mok commented, "We expect the LED industry to continue to struggle in 2016, and after 2 years of growth and a weak finish exiting 2015, we expect MOCVD shipments to decline and reach a new bottom in 2016 below the 2013 cyclical low. On the other hand, we are encouraged by VECO’s strengthened market share in the MOCVD space with the wide success of its next-gen EPIK700 tool against primary competitor AIXG [N/R]. We also like VECO's efforts in diversifying away from the LED space and believe the recent success will drive revenue growth from some of those new markets. However, we expect weakness in MOCVD to post sizable downside risk to consensus estimates, limiting the stock in the coming year."

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 $21.35 yesterday.

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