- First Albany is out with a lovely call on Brush Engineered Materials (NYSE:BW) after the co cut its second-quarter earnings outlook, partly due to weaker market conditions and unexpected sharp movements in metal prices. The Cleveland-based maker of alloy and beryllium products, and precious metals products said demand for its products for cell phone and magnetic media applications was below what had been previously expected.
Brush now expects 2Q EPS to be below the low end of the previously announced range of $0.50 to $0.65 per share. Firm's 2Q:07 EPS estimate of $0.51 was quite conservative vs. the consensus estimate of $0.59, as their numbers already accounted for some near-term inventory of ruthenium at customers and at the same time, some inventory at the company's cellular phone customers. While management did not give specific guidance, they are now modeling EPS of $0.45 in 2Q.
Firm notes their channel checks at Seagate (STX) and Komag (KOMG) (two of the three key customers of Brush for ruthenium) continue to indicate that recent weakness in business has not at all changed their plans to transition the technology to perpendicular media. If anything at all, both customers now expect the adoption by year-end to be higher than what they had anticipated earlier.
For the full year, the company now guided for EPS to be in the range of $2.00 to $2.55, down from their previous guidance of $2.20 to$2.75. FA's CY07 and CY08 EPS estimates remain unchanged at $2.35 and $3.15, respectively.
Earlier, First Albany had recommended that clients should take any weakness in the stock until the reporting of 2Q results as a buying opportunity, as they were expecting the company to report below-consensus 2Q results. With this preannouncement, they believe the negative news is already out now. Firm expects the growing adoption of perpendicular media and typical seasonality in the company's consumer-driven products (roughly 20% or revenues) to drive a strong second half for Brush. They would be buyers of the stock today as it pulls back on this negative news. Maintains Buy rating and $63 price target on the stock.
Notablecalls: This stock is an ideal bounce candidate. First Albany has done good job covering this one and I think they are right about calling today's weakness a buying oppy.
Brush now expects 2Q EPS to be below the low end of the previously announced range of $0.50 to $0.65 per share. Firm's 2Q:07 EPS estimate of $0.51 was quite conservative vs. the consensus estimate of $0.59, as their numbers already accounted for some near-term inventory of ruthenium at customers and at the same time, some inventory at the company's cellular phone customers. While management did not give specific guidance, they are now modeling EPS of $0.45 in 2Q.
Firm notes their channel checks at Seagate (STX) and Komag (KOMG) (two of the three key customers of Brush for ruthenium) continue to indicate that recent weakness in business has not at all changed their plans to transition the technology to perpendicular media. If anything at all, both customers now expect the adoption by year-end to be higher than what they had anticipated earlier.
For the full year, the company now guided for EPS to be in the range of $2.00 to $2.55, down from their previous guidance of $2.20 to$2.75. FA's CY07 and CY08 EPS estimates remain unchanged at $2.35 and $3.15, respectively.
Earlier, First Albany had recommended that clients should take any weakness in the stock until the reporting of 2Q results as a buying opportunity, as they were expecting the company to report below-consensus 2Q results. With this preannouncement, they believe the negative news is already out now. Firm expects the growing adoption of perpendicular media and typical seasonality in the company's consumer-driven products (roughly 20% or revenues) to drive a strong second half for Brush. They would be buyers of the stock today as it pulls back on this negative news. Maintains Buy rating and $63 price target on the stock.
Notablecalls: This stock is an ideal bounce candidate. First Albany has done good job covering this one and I think they are right about calling today's weakness a buying oppy.
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