VECO
Veeco Instruments Inc.
$59.55
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 85.7% above fair value
You pay
$59.55
Bear
$24.84
Fair
$32.08
Bull
$39.31
Bear
$24.84
-58.3%
$1.25 × 12x + net cash
Fair
$32.08
-46.1%
$1.25 × 16x + net cash
Bull
$39.31
-34.0%
$1.25 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.25)
Implied Market Multiple
47.5x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $55.00 from 36 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $32.08 per share.
Warnings
Price-to-book value of 5.5x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $55.00 (from 36 analysts). Our estimate is 60% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing