Shares of three passive electronic component makers plummeted Tuesday after
cut their ratings, citing a risky outlook for earnings and sales in the upcoming months and beyond.
The brokerage downgraded
to neutral from buy for the near term in a note to clients on U.S. passive component makers.
Passive electronic components are elements of every electronic circuit and are used to store, filter or regulate electric energy. Many types of electronic products in the computer, telecommunications and consumer electronics industries use them.
Shares of AVX were recently down 16.75%, or $4.00, to $19.88 in
trading. Kemet was falling 18.82%, or $4.38, to $18.94, while Vishay shares tumbled 19.08%, or $4.94, to $20.94, in
New York Stock Exchange
Merrill Lynch cut its EPS projections for the next calendar year on the U.S. trio and said their future share price performance "could be limited over the next few quarters." However, it said it kept its long-term buy recommendation for the three, and that investors "with a long term time horizon -- say 12 - 18 months -- should find attractive entry points for all three stocks in coming months."
Merrill Lynch also said that "EPS declines over the next twelve months will not be as severe as the last downturn."