LED Lighting Stock Losers: Aixtron
NEW YORK (
) -- Shares of LED lighting equipment play
Aixtron
(AIXG)
are trading away from the general bullish sentiment for LED stocks on Monday. In fact, the main LED stock plays continue to trade up on another losing day for the markets on Monday, continuing a trend that has been in place for at least the past few weeks.
Aixtron shares were down more than 5% on the day and trading in the LED stock had surpassed its average daily volume by the early afternoon.
It's notable any time an LED stock trades away from the group as a whole. It's a small group, to say the least, but the trio of
Cree
(CREE) - Get Report
,
Veeco Instruments
(VECO) - Get Report
and Aixtron tend to trade as a momentum basket. When sentiment for the LED market is optimistic, the triumvirate of LED stocks rally, and vice versa.
Aixtron and Veeco are the true trading mates, operating in the exact same market of selling MOCVD machines to the LED manufacturers.
The biggest difference between Aixtron and Veeco is geographic diversification of clients. Veeco is more heavily tied to the rising tide of LED manufacturers in mainland China, while Aixtron has not penetrated the mainland China market to the same extent, and has a larger focus on Taiwan.
It's possible that Aixtron is selling off on Monday while Veeco and Cree continue to rise, based on the resurgence of the LED business in China and the recent signs of slowdown in Taiwan. However, analysts contacted by
TheStreet
on Monday thought that this would be a stretch. Taiwanese LED companies have experienced declining revenues in recent months, and Aixtron does not have as large a mainland China buffer as Veeco has to offset the slowdown in Taiwan.
While there has been clear evidence of a slowdown in the Taiwanese LED market at the same time that China seems to be set to rebound off a bottoming of the market, the difference between Aixtron and Veeco's business geography isn't big enough to merit a big Aixtron selloff.
All the LED stocks are up significantly in the past three months after the late summer/early fall selloff. Last week, Cree bullishness hit a short-term peak with shares up 10% during the Thanksgiving week.
Veeco shares are up 30% in the past three months and Aixtron shares are up 25% in the past three months. Therefore, the most likely explanation for the Aixtron selloff on Monday -- which began with it being one of the pre-market's biggest losers -- is an institutional investor taking profits and getting out of the LED stock.
Aixtron management had also been on a road show over the past several weeks, according to analysts, and now that any bullish trading triggered by the road show has ended, it could be an opportune time to book profits.
Analysts said it's not the first time that a one-day trading event bucks the general sentiment in LED stocks has occurred. However, analysts added that the selloff in Aixtron does merit watching for a few days.
If the trend continues down for Aixtron shares while Veeco and Cree continue up, there may be some negative news regarding Aixtron that's bound to surface.
If Aixtron is down again on Tuesday while the Veeco continues to trade up, Street analysts may start dialing Veeco management for an explanation, and investors may want to take notice.
-- Written by Eric Rosenbaum from New York.
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