Citi Sees 60% Upside In Shares Of Veeco Instruments Inc (VECO)

Citi Investment Research has a $52 price target and a Buy/High Risk rating on shares of Veeco Instruments Inc VECO after the sell off in shares may be overdone. This $52 price target represents a nearly 60% return from current levels. In a note to investors, Citi writes, "Fears of order cliff overdone; Adding VECO to TPL — Consistent with our prior commentary that the low $30’s is a key trigger point for this stock, we are increasing F2011 EPS from $4.66 to $4.85 and adding the stock to Top Picks Live, Citi’s list of best ideas. The catalyst for our call is a series of checks which add confidence that the Street is overly concerned about an order cliff in the LED/solar business. We now have increased confidence that orders should remain robust (flat +/- 10%) through year-end and even into CQ1:11. With the stock down ~30% just this month, ~25% of the stock float still short, another big upward estimate revision likely for CQ4 (we are modeling $1.74 versus Street $1.37), and the lack of a big order cliff through CQ1, the set-up for the stock is again very favorable if we are right about orders. We are maintaining our $52 target which is a sum of the parts analysis assuming 15% discount to AIXG’s ~10x EPS multiple on 2011 (very conservative given VECO is gaining significant share) in the LED business, ~5x 2011 EPS for the data storage business, and adding ~$13/share in projected net cash at YE2011." Shares of Veeco Instruments Inc. closed at $31.11 yesterday.