Citi Comments On Veeco Instruments Following Earnings Report

While results were largely in-line w/Street, Veeco Instruments VECO is no longer beating and raising, in part due to some revenue timing issues in China. The official launch of the new MaxBright tool should both help margins and drive share even higher. That said, the fundamental risk here remains skewed to the downside as it is hard to see LED customers in Taiwan/Korea coming roaring back in 2H:11 to even partially offset what should be a precipitous decline in China orders. Positives include MaxBright as a game-changer and should allow VECO to keep gaining share; and it could bring Taiwan/Korea customers back to order table. Negatives include: VECO now acknowledges China orders could weaken mid- CY11; and based on sub-50% utilization rate and lower capex, big hope for Korea/Taiwan recovery in 2H could be too optimistic. Citi has a Hold rating and $50 PT on VECO VECO closed Monday at $45.14