Citi Reports Changing Times For Veeco Instruments

According to Citi, Veeco Instruments VECO stock traded up slightly. Citi said that while stock traded up slightly AMC on pos CQ2/CQ3 order commentary, the fact is this is merely the result of a $75MM (~25%) miss in CQ1 orders due to order/deposit timing. “Timing aside, we believe the biz has stopped improving& is starting to move the other direction w/ 1H:11 orders now fully $100MM (~15%) LOWER than our pre-call estimate. The share story remains strong as we count demand for up to 200-250 MaxBright chambers that may book by YE:11. That said, with estimates not going up any more & starting to move the other way, growth investors should be looking elsewhere in our view. Even if EPS were $5 again in 2012 making net cash ~$20/share, this implies the stock is trading 7x rolling peak EPS – not particularly extraordinary. Thus, the upside even for a value investor doesn't seem compelling. On the back of lower orders, we are cutting FY:11 EPS (non-GAAP) from $5.03 to $4.77 while 2012 remains largely unchanged at $2.46. Maintain Hold (2S) and $49 target. All else being equal, we might consider lightening positions on a significant rally above the current price.” Veeco Instruments closed yesterday at $47.97.