Investment house

Salomon Smith Barney

today reiterated its Buy rating for


(Nasdaq:ORBK) after the company yesterday stated it will meet forecasts.

SSB set a price target of $70, which is 100% above Orbotech's price on the market.

UBS Warburg also rates Orbotech a Buy but set its target much lower, cutting it from $70 at $51. That's still 72% above Orbotech's market price.

Yesterday Orbotech annouunced it stands by its 27% growth forecast for the first quarter of 2001. SSB analysts Victor Halpert and Colby Wheeler believe that the company will also attain the first-quarter EPS target of 64 cents per share.

The analysts note that Orbotech's policy of cutting back spending while sustaining its investment in R&D, and maintaining its service and sales systems, is exactly what is needed in today's economic environment.

Orbotech said that it hasn't been affected by the electronics slowdown yet. Neither has its rival in PCB inspection kits,


(Nasdaq:CAMT), the analysts note. But visibility in this sector is problematic.

Wheeler and Halpert believe that even if Orbotech fails to generate growth in the second quarter of 2001, it will still maintain a positive cash flow.

The analysts expect Orbotech to report 2001 revenues of $443 million, and earnings of $2.4 per share.

UBS worries about the market

Analyst Jonathan Half noted that Orbotech's streamlining measures indicate that its market is weakening. On the other hand, he noted that on March 7 Orbotech acquired two R&D subsidiaries of Browne & Sharp Manufacturing (Nasdaq/BMS:BNS), with 25 employees, that has several patents in hand.

The companies Orbotech bought are called Browne & Sharp Surface Inspection Systems Ltd. and Browne & Sharp Surface Inspection Systems Inc., respectively located in Kfar Saba and Morgan Hill, California.

Because of the weak market, Half lowered growth forecasts for 2001 from 22% to 15%, which would bring sales to $429.2 million. He expects a profit per share of $2.35, down from an earlier estimate of $2.77. He expects the Brown & Sharpe subsidiaries to contriute 8 cents to EPS, while lifting R&D costs by about half a million dollars a year.

Half predicts that Orbotech will be unveiling new products this year, expanding from inspection kits for PCBs to kits for FPDs - flat panel displays - too. While sales may be weak in January and February 2001, Half says, they should pick up in March and April.

Half believes Orbotech shares should trade at a premium because of the company's dominance from the perspectives of market share, product range and opportunities in new markets.