SoundView: Brooks Automation To Benefit From Chip Recovery
Friday December 12, 9:31 am ET
By Adam L. Freeman, Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Apt management and a recovering semiconductor industry have created a favorable investing opportunity in Brooks Automation Inc. (NasdaqNM:BRKS - News) shares, according to SoundView Technology Group (News - Websites) .
"We continue to receive improving data points for the industry, and in particular for Brooks," said analyst Michael O'Brien, who upgraded the stock Friday to outperform from neutral and increased his price target by $8 to $30. The price target is based on 21 times the analyst's calendar 2005 earnings estimate of $1.45.
Shares closed Thursday at $20.59, up 5.3%.
Brooks, a Chelmsford, Mass., maker of equipment for the semiconductor industry, "continues to represent leading customers in the area of original equipment manufacturing, or OEM, with business from these clients "quite robust, " said O'Brien.
"Brooks continues to focus on operational improvements, and we are encouraged that the valuation is sufficiently compelling," the analyst said. "The risk versus reward, in our view, suggests that outperform us the appropriate rating."
As a consequence, for the March quarter the analyst raised his revenue estimate by $8 million to $102, "and this may still prove to be too conservative." The analyst owns no shares, although it wasn't immediately apparent whether SoundView has an investment banking history with Brooks.
Brooks, in O'Brien's opinion, is also seeing "robust activity" from the flat- panel equipment business.
Meanwhile, the "holy grail" for Brooks' OEM business continues to be capturing the internal robotics business at Applied Materials Inc. (NasdaqNM:AMAT - News) , the Santa Clara, Calif., semiconductor equipment maker with $4,5 billion in revenue during its fiscal 2003.
Capturing Applied Material's, however, will be "a slow process, but even small wins here and there....can meaningfully add to the growth proposition. As 2004 progresses, this area could provide additional momentum."
Earlier this week, Brooks completed an offering of 6 million shares worth about $108 million. |
