here's the latest lehman report (a week old for non-clients). normal disclosure applies.
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PRI Automation: 1Q About As Expected; Business Turning Up!
Author: Edward C. White, Jr., CFA 1(212)526-4744
Rating: 1
Rank (Old): 1-Buy
Rank (New): 1-Buy
Price : $34 1/4
52wk Range: $38-9.56
Price Target (Old): $40
Price Target (New): $40
Today's Date : 01/29/99
Price (As of 1/28): $32 1/4
Revenue (1999): 119.5 Mil.
Proj. 5yr EPS Grth: 30.0%
P/E 1999; 2000 : N/M; 25.8 X
Disclosure(s): C
* PRI Automation reported a fiscal first quarter loss of $0.26, slightly worse than our estimate of a $0.25 loss. But the company is significantly more optimistic about its outlook than it has been in the recent past.
* Orders were up 30% sequentially, and the book-to-bill ratio was 0.9. So far in fiscal second quarter activity is up significantly. Orders at Equipe, which sells to other equipment vendors, were 2 times the fiscal first quarter's bookings rate.
* Most of the upturn is being driven by semiconductor plant projects that had been postponed, which are now being reinstated. At the same time, the company believes that 300mm wafer activity is picking up.
* The company is working to integrate its software products into a complete chip plant automation software suite. This could provide revenue growth opportunity and upside gross profit margin potential.
* We are encouraged by the company's enthusiasm for its outlook, and it confirms to us that PRI Automation has substantial earning power ahead. We recommend purchasing the shares. We rate the company 1 Buy.
Highlights:
New and existing plant projects drive opportunity. The company sees an opportunity for automation in 3-5 new plants, and in 3-5 upgrades to existing facilities. In general, the company is seeing the reinstatement of a number of important plant projects which had been placed on hold. The upturn in orders for the quarter was driven by 200mm wafer activity, not by 300mm activity.
Tool automation recovery suggests that chip companies are investing in new technology. Equipe sells to semiconductor equipment manufacturers, and the upturn has been generally driven by demand from existing customers. At the same time, Equipe did add two new customers during the quarter, one in atmospheric robots, and one in vacuum robots. So far this fiscal year, the company has received more business than it did in all of fiscal 1998.
Upturn in factory automation systems suggests that capacity-oriented purchases are resuming. The resumption in demand covers PRI's track and stocker systems, the latter of which is normally tied more to capacity expansion than to technology upgrades.
While it did not figure prominently in the quarter, 300mm activity promises to drive a higher level of business activity in 1999-2000. PRI Automation anticipates that two pilot 300mm wafer production lines will be built in 1999. While we believe PRI Automation has substantial opportunity in 200mm projects, the company derives especially high revenue leverage with 300mm projects, because these plants generally require a fuller level of automation than 200mm facilities.
Lehman Brothers is acting as advisor to PRI Automation on its acquisition of Promis Systems.
Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the past three years a public offering of securities for this company. B-An employee of Lehman Brothers Inc. is a director of this company. C-Lehman Brothers Inc. makes a market in the securities of this company. G-The Lehman Brothers analyst who covers this company also has position in its securities. |
