First Union Downgrades Newport Corp.
First Union cut its rating on Newport (NEWP ) to market perform.
Saying that results exceeded estimates, analyst Stephen Koffler noted that Newport is cautious on its capital equipment business. He thinks the supplier of fiber optics and telecommunications equipment is likely to face order push-outs in the second half of 2001. As a result, Koffler says the company's overall growth rate for 2001 is now at the low end of the 40%-50% range.
However, he continues to believe that the fiber-optic business is robust and predicts a solid outlook for 2001. Newport raised its $1.41 2001 EPS estimate to $1.55, and raised its target stock price to $115 (60 times the $1.92 EPS for 2002). But Koffler says the target price is less than 20% from Newport's current price levels, adding that multiple expansion is unlikely to continue given the company's cautious outlook. Newport would be more aggressive below $85.