UPDATE: DA Davidson Cuts PT to $6 on AXT; Margin Pressures

DA Davidson reduces its price target from $7 to $6 on Buy-rated AXT

as Gallium pricing is impacting margins on in-line revenues. DA Davidson notes, "AXTI reported Q1 EPS of $0.05 on revenues of $23.5 million (+10.7% from Q4:CY11 and -4.4% from Q1:CY11) versus consensus expectations of $0.09 on $22.6 million and our $0.09 on $23 million estimate. EPS fell shy of both consensus and our estimates due to low Gallium raw material prices, which caused gross margins to come in at 34.9% versus our and consensus estimates of 37.0% and 37.6%, respectively." AXTI closed at $5.05 on Wednesday.