UPDATE: Stifel Nicolaus Initiates Hold on Kemet

In a morning research summary, Stifel Nicolaus initiates coverage on Kemet Corporation

as it acknowledges the company's impressive turnaround. On KEM fundamental, Stifel Nicolaus notes, “After posting losses in FY10, KEM saw business snap back. Both tantalum and ceramic capacitors were in short supply in 2010, and lead-times were well above normal levels and as high as 30 weeks. Pricing improved amid supply constraints, and KEM put up record gross margins in its tantalum and ceramics segments. Margins ended up peaking in F2Q11 (September 2010). Fundamentals have deteriorated since then due to an overbuild of inventory at distribution (about 50% of sales) and softening end markets.” KEM closed at $10.35 per share on Wednesday.