Please ensure Javascript is enabled for purposes of website accessibility

Why Veeco Instruments Inc. Stock Slid on Tuesday

By Daniel Sparks - Feb 23, 2016 at 12:39PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Better-than-expected earnings weren't enough to make up for the company's weak guidance.

What: Shares of thin film equipment manufacturer Veeco Instruments (VECO -0.68%) fell as much as much as 20% on Tuesday. The decline has improved slightly to 14% at the time of this writing. The stock is down after the company's soft guidance and an analyst downgrade.

So what: Veeco's fourth-quarter non-GAAP EPS of $0.01 was slightly better than the consensus analyst estimate for a loss per share of $0.02. But despite the earnings beat, the company's weak guidance stood out most in the company's results.

Veeco guided for first-quarter revenue in the range of $70 million to $80 million -- a significant pullback from the company's year-ago first-quarter revenue of $98 million. 

Since our bookings in Q3 of 2015 were low, we see its impact in projected Q1 revenue, explained Veeco Instruments CFO Sam Maheshwari during the company's fourth-quarter earnings call (via a Reuters transcript).

Now what: Looking beyond Q1, management seemed uncertain about when revenue could begin to improve.

Metal organic chemical vapor deposition, or MOCVD investment backdrop is "expected to remain soft through the first half," based on the company's "somewhat depressed MOCVD bookings," management explained during the call.

It did say revenue will "probably" be up in Q2 versus Q1. Notably, however, a sequential increase between Q1 and Q2 would still likely represent a year-over-year decline since the company's revenue in Q2 last year was $131 million. It would take a huge jump for revenue to get from a range of $70 million to $80 million in Q1 to $131 million in Q2.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Veeco Instruments Inc. Stock Quote
Veeco Instruments Inc.
$22.98 (-0.68%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.