I’ve written this several times in the past, but it bears repeating – margins matter more in sectors like semiconductor equipment than some analysts and investors believe. Semi equipment company Veeco (VECO) is doing pretty well from a revenue and order flow perspective, and I believe the business is on the cusp of meaningful acceleration, but weaker margin guidance weighs on valuation in the near term and has driven underperformance since my last update.
Veeco is a company that has long struggled to get its ducks in a row, but I believe the outlook is bright. In addition to a strong-moat position in data storage, Veeco has growth opportunities in areas like annealing, EUV mask blanks, GaN chip production, and chip packaging that shouldn’t be ignored. The shares need better margin momentum to outperform, but in a sector that offers few bargains, Veeco is worth a look on its leverage to ongoing capacity expansion spending.
Read the full article here:
Weaker Margin Guidance Overshadowing Progress At Veeco Instruments
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