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Axt Climbs as Quarterly Sales Forecast Beats Estimates

Feb. 26 (Bloomberg) -- Axt Inc. rose the most in five months after the maker of semiconductor components projected first-quarter revenue that was higher than analysts’ estimates.

The shares climbed 5.7 percent to $2.96 at the close in New York, the biggest one-day gain since Sept. 21.

Sales in the current quarter will be $20 million to $21 million, Chief Financial Officer Raymond Low said yesterday on a conference call. Analysts projected $19 million, the average of five estimates compiled by Bloomberg. The company forecast a loss of as much as 8 cents a share in the quarter.

Still, Axt’s profitability is poised to rise this year, driven by an increase in demand for light-emitting diodes, or LEDs, and mobile phones, which use Axt’s gallium-based components, said Dave Kang, an analyst with B. Riley & Co. in San Francisco.

In the “second half of this year we do expect LEDs and wireless handsets to turn” higher, Kang said in a telephone interview. “When they turn, they should drive gallium prices higher and that in turn should drive the company’s gross margin to expand.”

Kang has a buy rating on the shares and has a 12-month price target of $4.60.

Axt has dropped 48 percent in the last 12 months through today, compared with a gain of less than 1 percent for the Russell 2000 Technology Index.

To contact the reporter on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net

To contact the editor responsible for this story: Jeffrey Taylor at jtaylor48@bloomberg.net

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