With a market jittery about earnings, a stock usually gets smashed when the company's results trail the year-ago figure. So on July 27, when ILC Technology reported fiscal third-quarter earnings of 24 cents a share vs. 30 cents last year, one might have expected a sharp sell-off, especially since technology stocks have been out of favor of late. Yet the stock didn't get knocked down--in fact, it inched up from 10 3/8 to 10 3/4.

What's propping up ILC? A lot of savvy investors think that at these levels, this stock is a great buy. As one of the world's major makers of high-intensity lamps used in endoscopic surgery and to activate lasers, "ILC is one surefire way of playing the medical-device game," says investment manager George Clairmont, president of Clairvest. He thinks the stock "is a double" in a year. Very few technology companies, he says, have ILC's fundamentals: strong cash flow, no debt, a growth market, plus a stock that has been beaten down nearly 50% this year. True, growth slowed in late 1991 and into 1992 because of the recession and overstocking by original-equipment makers of medical devices.

But that, says analyst John Girton of the San Francisco securities firm Van Kasper, shouldn't be a worry. "ILC's lighting business will remain a nicely growing and profitable one in years to come," he says. The stock's pounding was "an overreaction to what seems only a temporary slowdown in ILC's growth rate, which should remain at least in the 15%-to-20% range," he says.

"Orders are coming back for ILC's core, high-margin Cermax high-intensity lamps," says Girton. He sees earnings rising from 98 cents in 1991 to $1.05 a share for the fiscal year ending Sept. 30, 1992, and to $1.25 in 1993.

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