UBS Warburg downgraded Electro Scientific (ESIO) to hold from strong buy.
Analyst Byron Walker says the fourth quarter was better than consensus, with solid bookings performance. However, he says ongoing improvements will be slower than recoveries in the previous cycles.
While Electro Scientific is approaching a historic price/book value support levels, price/earnings valuation will likely remain rich until meaningful order activity returns. Electro Scientific also expects its book-to-bill ratio to be above unity, but the company is uncertain regarding order growth.
Walker cut his $0.09 calendar 2002 earnings per share estimate to a $0.03 loss, and cut the $1.72 calendar 2003 EPS to $1.00 EPS. He also slashed the $48 target to $20.