Zacks Investment Research downgraded Ultratech, Inc. (UTEK) to a Zacks Rank #5 (Strong Sell) on Mar 1, 2014. Going by the Zacks model, the companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market.
Why the Downgrade?
Ultratech, Inc. reported disappointing results for fourth-quarter 2013 on Jan 30, 2014. It reported a loss per share of 51 cents as against earnings per share of 48 cents in the year-ago quarter. Also, the bottom-line loss was wider than the Zacks Consensus Estimate of a loss of 30 cents.
Net sales in the quarter plummeted to $24.0 million from $65.6 million in the fourth-quarter 2012. The company suffered due to conservative spending by its customers that led to a decline in revenues from Systems and Parts segments. Gross margin was 8.4%, down from 56.7% recorded in the year-ago quarter.
Fourth-quarter 2013 results triggered downward revisions in earnings estimates for Ultratech, Inc. In the last 60 days, the Zacks Consensus Estimate has fallen 57.1% to 33 cents for 2014, while it worsened from a loss per share of 15 cents to 21 cents for first-quarter 2014.
Lowered earnings estimates along with a negative 224.3% average earnings surprise have made us suspicious about Ultratech, Inc.’s performance in the coming quarters.
Other Stocks to Consider
Ultratech, Inc. is a $713 million company operating in the semiconductor equipment and materials industry. Some better-ranked stocks in the same industry include Ultra Clean Holdings Inc. (UCTT), Ambarella, Inc. (AMBA) and Amtech Systems Inc. (ASYS), all of which carry a Zacks Rank #2 (Buy).