FEI "buy," target price reduced

02/05/08 - Brean Murray, Carret & Co

NEW YORK, February 5 (newratings.com) - Analyst Mark S Miller of Brean Murray maintains his "buy" rating on FEI Company (FEIC), while reducing his estimates for the company. The target price has been reduced from $38 to $31.

In a research note published this morning, the analyst mentions that the company has posted robust December quarter results, with record sales. The analyst adds, however, that FEI’s margins in the quarter declined by 130bps sequentially on account of the weak dollar, the company's product mix and lower-than-expected service margins, the analyst says. The company has guided to flat-to-lower sales and a decline to 40% margins for the March quarter, implying an EPS of $0.15-$0.25, significantly short of the earlier expectations. The guidance reflects concerns regarding the dollar and the uncertainty surrounding the NanoElectronics business, Brean Murray adds. The EPS estimate for 2008 has been reduced from $1.75 to $1.02.