Equity Research Analyst Calls it Right: J.P. Morgan Equity Analyst Interview Had Veeco as "Top Pick"

Wall Street Transcript

67 WALL STREET, New York - April 23, 2013 - The Wall Street Transcript contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Interview transcripts are available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Outlook for Biofuels and Biochemicals - Asia Pacific Demand for Solar Energy - Grid Parity Timelines for Alternative Energy - Water Infrastructure Development - Irrigation and Metering Technology - Water Industry Consolidation

Companies include: First Solar, Inc. (FSLR), MEMC Electronic Materials Inc. (WFR), Broadwind Energy, Inc. (BWEN), Veeco Instruments Inc. (VECO)

In the following excerpt from the Utilities, Alternative Energy and Water Services Report, Christopher Blansett of J.P. Morgan discussed the prospects for VECO for investors:

TWST: Which LED names do you like right now?

Mr. Blansett: Long term, we think Veeco (VECO) is our top pick. That's ticker VECO. They are a capital equipment supplier. They enable LED makers to make the actual chips. It's a very difficult market for new entrants to come into. They've gained a lot of share against their primary competitor, who is based in Germany. Although Veeco's business is likely to be very cyclical, they put together a high variable cost business model that we think over time will allow them to generate significant amounts of free cash flow.

I think the key thing to look for here that investors really focus on is lack of new entrants because whether I'm making LEDs or other parts of the food chain, there seems to always be the ability for someone new to show up. But in this very critical capital equipment segment of the food chain, it's very difficult for a new entrant to come. It's one of the few places where there is a huge barrier to entry. So we like that aspect, like their variable cost model, and we like the fact that they have very low capex to revenue. So in the end, when they do generate free cash flow, they are not spending it to build a new facility. It really can just go back to the shareholders or for additional investments, say, in new technology...

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