SoundView upgraded Brooks Automation (BRKS) to outperform from neutral.
Analyst Michael O'Brien says he's receiving improving data points for the factory automation industry, especially for Brooks. He thinks the chip cycle is in the early stages of a recovery; given Brooks' focus on operating performance, he thinks the company has substantial leverage.
O'Brien says the original equipment manufacturing business is strong, with ramps occurring from chip-equpment makers Lam Research, KLA-Tencor, Novellus Systems, and others. Also, he says factory hardware may finally be turning a corner; a new factory transport product could provide substantial upside to the lithography automation business.
O'Briend says Brooks' valuation is compelling. He revised the 9 cents fiscal 2004 (Sep.) loss estimate to 14 cents earnings per share, and cut the 92 cents fiscal 2005 earnings per share estimate to $1.21 earnings per share.