Brooks Automation Shares Soar On Analyst Upgrade

PHILADELPHIA (AP) — Shares of Brooks Automation Inc. soared Monday after an analyst raised his investment recommendation on the stock, citing improved business and falling expenses that he said should boost earnings.

Stifel Nicolaus analyst Patrick Ho raised his recommendation on the stock to "Buy" from "Hold" and set a target price of $12 a share. He also cut his 2010 loss estimate to 27 cents per share from 37 cents.

He said he believes business has picked up at Brooks, a maker of chip manufacturing equipment, along with gains seen at its industry peers, while improved earnings in the fourth quarter ended this month is a possibility.

Expenses already have fallen in the June quarter and more savings are expected in the current period, which are "critical" for Brooks to more quickly return to profitability, Ho said in a research report.

Another positive factor noted by the analyst is that the pace at which Brooks is using up its cash should start to slow in the latter part of this year and into 2010. Also, Brooks has entered new markets, such as the solar industry, that could fuel future growth.

Still, Brooks shares have lagged behind its competitors year-to-date.

"Thus, we believe at current prices, there is clearly much more upside than downside," Ho said.

Shares of Brooks were up 60 cents, or 8.2 percent, to $7.91 in morning trading.