NEW YORK ( TheStreet) -- LED sector equipment play Veeco (VECO - Get Report) provided an outlook for order growth in the next two quarters that was bullish, and Veeco shares were up by 3% in trading on Tuesday. The rally in Veeco shares, though, towed a valuation line that Veeco has not been able to break out above. Analysts indicated it may be a signal that investors remain concerned about a looming capacity glut in the LED sector and a slowdown in Chinese subsidies to support the purchase of MOCVD equipment sold by Veeco and its main competitor Aixtron (AIXG - Get Report) .
On Monday, Barclays downgraded Veeco from buy to hold and set a new price target of $50, down from $60. On Tuesday, after strong results coming in ahead of Wall Street estimates, and a revenue and earnings outlook that was in line with the Wall Street view for the second quarter and full year 2011 -- the guidance also reaffirmed the company's previous outlook -- Veeco shares ended trading at $50.02. It was looking for the moment like Barclays drew the right line in the sand as far as investors versus Veeco. Just last Thursday, before Veeco's bullish outlook and beat, shares had been at the same "pushing $50" level.
TheStreet explored some Veeco trading triggers, and all were reflected in the earnings and commentary on coming quarters.
Veeco reported earnings of $1.32 per share on revenue of $255 million, ahead of the Wall Street consensus of earnings at $1.22 and revenue of $247 million.
For the June quarter, Veeco forecast revenue between $255 million and $285 million. Veeco earnings per share are forecast to be between $1.20 to $1.45. The Veeco guidance mid-point matches the Street consensus of earnings at $1.34 on revenue of $270 million.For the full year, Veeco reaffirmed its guidance of earnings above $5 and revenue above $1 billion. John Peeler, Veeco CEO, said in the earnings release, ""We currently forecast Q2 2011 orders at 25% or more above the Q1 level, and we have visibility for continued order strength through Q3," added Peeler. Patrick Ho, analyst at Stifel, who remains concerned that the Chinese subsidy death knell is coming, said he gave Veeco credit for its order growth outlook on the June quarter, which surpassed his expectations. However, analysts also noted that while Veeco's orders are going up in the June quarter by 25%, in the just-reported quarter orders fell by nearly the same percentage.