Needham Ups Tektronix Outlook

Analyst John Harmon sees potentially stronger margins, and price appreciation, for the testing-equipment maker

Needham raised its estimates on Tektronix (TEK ).

Analyst John Harmon says the fourth quarter is ahead of his estimates. He notes business is strong across the board, especially in oscilloscopes, signal sources, logic analyzers, and radio-frequency test instruments. He believes management's guidance for decreased revenues and earnings in the first quarter is conservative, and is unlikely considering industry fundamentals, the state of new products and orders, and Tektronix's backlog.

Harmon raised the $1.25 fiscal 2005 (May) EPS estimate to $1.35 on revenue of $1.02 billion (up from the previous estimate of $1.01 billion.) He rates the shares as buy, with a $38 target. But Harmon notes the shares trade below peers' p-e on a calendar 2005 basis, and sees margin expansion potential in the company's business model.

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