After spending much of the past six months at a less-than-commanding two-star rank, Veeco Instruments (Nasdaq: VECO ) has impressed enough top-performing members of our 165,000-strong Motley Fool CAPS community to finally regain three-star status. A total of 265 members have given their opinion on the specialized equipment maker, with many offering analysis and commentary to explain their recent optimism.
Veeco was firing on all cylinders in the second quarter. All of its businesses saw improvements, helping the company achieve record quarterly revenue and earnings per share. To further focus its efforts on the popular light-emitting diode business, Veeco recently sold off its metrology business to scientific-instrument maker Bruker -- a move that has CAPS members abuzz about the possibilities.
According to research firm IMS Research, the metal organic chemical vapor deposition market is one of the fastest-growing categories in semiconductor manufacturing. IMS forecasts that LED capacity needs to rise by more than 350% through 2014 to keep up with demand. Veeco's second-quarter results jibe nicely with that outlook; the company quadrupled its MOCVD system shipments, and it expects that strong demand to continue.
Peers in this segment are showing a similar trend as well. Larger and pricier competitor Aixtron (Nasdaq: AIXG ) boosted its full-year guidance on LED strength. Cree (Nasdaq: CREE ) posted a huge jump in fiscal fourth-quarter earnings and revenue, despite Wall Street's disappointment with its first-quarter outlook. After shedding its thin-film solar line, Applied Materials (Nasdaq: AMAT ) aims to focus more attention on LED lighting technology. Meanwhile GT Solar (Nasdaq: SOLR ) looks to gain a presence in the industry with its purchase of privately held Crystal Systems.
While LEDs steal the limelight, some CAPS members also like the promise of Veeco's data-storage segment, which saw sales more than double in the quarter. Despite the recent competitive pressures on customer Seagate Technology (Nasdaq: STX ) and its hard-disk-manufacturing peer Western Digital (NYSE: WDC ) , Veeco expects more strong performance as customers invest in increased capacity and next-generation recording head technology.
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