Buy - Price 21.70 on June 16
by Merriman Curhan Ford

We are initiating coverage of FEIC with a Buy rating. FEI is a market leader in advanced electron microscopy instruments serving the electronics, industrial and life-sciences market; it is well positioned for double-digit percentage secular growth in the nanotech/clean technology market. We believe FEI's tool orders have likely bottomed in 1Q09 as orders begin to improve from share-gain opportunities in the life-science and industrial markets. Furthermore, 2H09 orders could exceed 1H09 orders by 10% due to Stimulus funding benefiting national/university labs focusing on clean technology and long-term R&D programs. Our FY10 EPS estimate of $1.30 (the Street is at $1.29) could prove conservative given our conservative margin assumptions. With an annualized 2H10 EPS run rate of $1.54 and a historical growth P/E for capital equipment in the 18x to 22x range, we believe the stock should be valued in the range of $28 to $32. Market cap: $840 million.

The stock has a PE of 28 , a PEG of 2.8

Scientific Hardware

MSN Money: FEI Company is a supplier of instruments for nanoscale imaging, analysis and prototyping to enable research, development and manufacturing in a range of industrial, academic and research institutional applications. The Company's products and systems include hardware and software for focused ion beam systems (FIBs), scanning electron microscopes (SEMs), transmission electron microscopes (TEMs) and DualBeam systems, which combine a FIB and SEM on a single platform.

Up 38.9% since October 2006.

Rule #1 Screen

good way to play the "nano" revolution. Company is selling equipment NOW that is being used by high tech and universities. Might be a takeover target in long run.

nanotechnology play with electron microscopes - small cap trying to diversify beyond microchip customer base.

Target: $ 43.00

"FEI makes gear for the burgeoning nanotech market; orders are expanding nicely. The 37 P/E may look high, but the growth rate justifies it. "
- Forbes Magazine June 2007

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Upgraded by Credit Suisse from Underperform to Neutral