Veeco Instrument Shares Get Upgrade At Summit Following Aixtron Sale News

Summit Research has upgraded Veeco Instruments Inc. VECO to Hold from Sell, with a price target of $23 after Bloomberg reported that Germany's AIXTRON SE (ADR) AIXG "is holding informal talks with potential buyers," including Veeco.

"We think that VECO buying AIXG would be fraught with anti-trust concerns. On the other hand, there could be plenty of other suitors including semiconductor capital equipment companies. In any case, we believe that the market is likely to bid up the stock price of AIXG. Additionally, it will also bid up the stock price of VECO as VECO is seen as the more successful member of the MOCVD duopoly," analyst Srini Sundararajan wrote in a note to clients.

"If one semi-cap company, say Lam Research Corporation LRCX, buys AIXG, then its competitors are likely to be circling around VECO, bidding up its stock price," the analyst added.

However, the analyst warned a potential Aixtron-Veeco merger would face antitrust concerns.

"The only way such a union could pass MOFCOM and U.S. DOJ anti-trust would be if the combined corporation got rid of AIXG's LED related Gallium Nitride (GaN) showerhead MOCVD platform," Sundararajan noted.

Shares of Veeco were up 2 percent in the pre-market hours to $19.99. They closed Friday's trading at $19.59.