Investment banks Salomon Smith Barney and Lehman Brothers (NYSE:LEH) were quick to update their forecasts on

Orbotech

(Nasdaq:ORBK) following the release of its financial results for the fourth quarter of 2000.

SSB reiterated its Buy rating and Lehman Brothers repeated its Strong Buy recommendation. Both banks set a price target of $70, 50% above the share's price before the bell today.

Orbotech develops automatic systems to inspect printed circuit boards and flat display panels using machine vision technology.

But Union Bank of Israel

(Bank Igud)

downgraded Orbotech from Strong Buy to Buy and slashed the target from $76 to $58.5.

SSB analyst Victor Halpert said that although the demand for electronic products and PCBs is slowing, he believes that the demand for Orbotech's PCB and FDP inspection technology will rise.

Halpert says the company beat his revenue and earnings forecasts. Revenues for the quarter totaled $105.9 million against Halpert's forecast of $100 million. Earnings came to 70 cents per share against Halpert's forecast of 63 cents.

Given Orbotech's strong fourth quarter, Halpert raised his revenue forecast for 2001 from $440 million to $443 million. He also lifted his EPS forecast from $2.59 to $2.63.

Lehman Brothers analyst Tobias Fischbein believes that the company's 2001 revenues will grow by 20%, and accordingly raised the revenue forecast for 2001 from $436 million to $444 million. He left the EPS forecast unchanged at $2.65.

But Igud analysts Amir Haik and Bernard Manor downgraded Orbotech from Strong Buy to Buy, slashing the target from $76 to $58.5. They concurred about Orbotech's strong points, and added that in 2000, the company managed to maintain its standard annual growth rate of 34%. Moreover, Orbotech's sales jumped 10.6% in the fourth quarter while peer companies showed a decline.

Orbotech expects 20% to 30% growth in inspection kits for complex PCBs, one of its new niches, the analysts write.

But they cannot disregard the expected slowdown in the PCB market, which accounted for 71% of Orbotech's sales in 2000.

On recent developments at the company, Haik and Manor wrote that the sales of PCB inspection systems are due to the miniaturization of end-products, such as cellular phones and electronic appliances. As the products shrink, they need smaller printed circuits.

The human eye cannot inspect miniature components, hence the growing demand for Orbotech's automated, precise optical inspection systems.

Also, as demand for mobile appliances with flat panel displays such as PDAs, mobile computers and cellular phones rises, Orbotech is seeing growing demand for its inspection systems for FPD.

Haik and Manor estimate Orbotech to be worth $1.85 billion, based on an E/P multiple of 20 that factors in 17% growth in net profit to $92.4 million for 2001.