Thursday, September 4, 2014

Seeking Alpha: FEI Company's Retreat Not Quite Enough

I have a feeling that FEI Company (NASDAQ:FEIC) is going to be the sort of stock that adds to my collection of grey hairs. There's not a lot to criticize in terms of the quality of the company - it has built leading share in electron microscopy with a broad range of offerings (scanning electron, transmission electron, dual-beam, fixed ion beam, et al) and has made a point of using innovation and product development to essentially create new market opportunities for its technology. Margins are pretty good and the company has put together a solid recent run of annual returns on invested capital.

The issue, then and now, is price. I thought FEI Company looked too pricey in February and the market did punish the company for consecutive cuts to sales guidance, but it's not exactly cheap yet. On the other hand, quality scientific equipment companies don't often trade at bargain prices and FEI Company is looking at multiple growth opportunities across its end markets. I'm inclined to maintain "price discipline" here and wait for a better price/value trade-off, but I won't be surprised if a strong third quarter (a beat-and-raise) sends these shares back into the high $80s or above.

Follow this link to the article:
FEI Company's Retreat Not Quite Enough

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