NEW YORK (Thomson Financial) - Shares of Verigy Ltd. rose in premarket
trading Wednesday after the company was upgraded to buy from hold by Stifel
Nicolaus, which cited the company's fourth-quarter earnings and first-quarter
outlook.
On Tuesday after the bell, the Singapore-based semiconductor testing company
posted earnings of $32 million, or 52 cents a share, above the mean estimate of
analysts polled by Thomson Financial of 50 cents a share.
Revenue rose 3.5% to $209 million, above analyst estimates of $200 million.
Verigy forecast first-quarter earnings of 49 cents to 54 cents a share on
revenue of between $195 million and $205 million. The earnings outlook includes
$3.6 million to $4.2 million in stock-based compensation.
Analysts estimate first-quarter earnings of 38 cents a share on revenue of
$180.3 million.
Verigy also said its board approved a $150 million buyback program. Under
the program, the company will repurchase up to 10% of Verigy's outstanding
shares.
In a note to clients, Stifel Nicolaus wrote the company's earnings and
outlook "strengthened our view that the company has perhaps the best business
model in the difficult semi-test industry."
The buyback program, it added, "addresses the company's continued strong
cash flow generation through the cycles."
Stifel Nicolaus initiated a $32 price target on Verigy, but lowered its 2008
earnings outlook to $2.07 a share from $2.17 a share, saying the industry was
"clearly in a state of flux." Despite that, it wrote that the company's business
model would allow it to weather volatility in its industry "better than any of
its peers."
Shares of Verigy rose 22.7% to $25.50 in premarket trading on volume of
about 25,500.
Ryan Vlastelica
rv/jw
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