WR Hambrecht Lowers FEI to Hold

Analyst John Roy says the downgrade is based on its second-quarter shortfall and newly announced restructuring

FEI Co. (FEIC ) cut its second-quarter guidance. WR Hambrecht downgraded the stock to hold from buy on the news.

Analyst John Roy tells Standard & Poor's MarketScope the downgrade is based on its second-quarter shortfall and newly announced restructuring. He thinks backorders are at record high levels. He wonders when and at what price the product will ship.

Roy cut his 9-cents second-quarter earnings per share estimate to breakeven, which includes $15 million reorganization charges and $3 million in savings from plant closures. He cut his $118.5 million revenue estimate to $110.5 million to reflect an estimated $18 million in sales slipping into the second half of the year.

He thinks a new focus on nanotech customers and its realignment may have a long-term impact, but questions remain around this. He is hoping for details on that and backlog orders on the Aug. 3 conference call.

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