The Gap Between Veeco's Improving Outlook And Market Perception Is Too Wide

There are valid reasons to be skeptical of Veeco Instruments (VECO) – the company has lost market share over the years in most of its businesses and the growth opportunities could be dismissed by casual observers as a “hodgepodge” of small niche applications. The thing is that multiple $100M/year “niches” add up to something meaningful for a company with around $450 million in revenue, and the market may well be underestimating the company’s ability to gain and hold share in meaningful tool markets like EUV mask blanks, LSA, microLED, compound semis and hard drives.

I started warming up to these shares last quarter, and with the underperformance since I’ve taken a small position. I think these shares should be trading closer to $15 today on the basis of pretty solid opportunities in EUV mask blanks, 5G RF filters and hard drives, and I see upside to $20 on improving, but certainly “at-risk”, results in areas like LSA, VCSEL and microLED production, and compound semis.

 

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The Gap Between Veeco's Improving Outlook And Market Perception Is Too Wide