Canaccord Adams downgrades EMCORE (Nasdaq: EMKR) from Buy to Hold and lower its price target from $17 to $5, following shortfall and options investigation.
Analyst Jonathan E. Dorsheimer said, "With a lack of positive catalysts on the horizon, a significant credibility overhang, and an unprofitable business at present, we feel compelled to downgrade EMKR shares to HOLD from Buy and lower our price target to $5 from $17 previously. Given the after-hour activity in the stock, we find EMKR shares fairly valued. Our new price target is based on applying a 20x multiple to our new C2008 EPS estimate of $0.23. While a 20x multiple may seem generous given the problems EMCORE is experiencing, we firmly believe EMCORE has a significant opportunity with its terrestrial solar opportunity and investors may be willing to pay a premium for this opportunity.