NEW YORK (AP) -- Shares of Credence Systems Corp., a maker of semiconductor testing equipment, dropped in early trading Friday, after analysts downgraded the stock, disappointed by the company's shelving of one of its highest profile development projects.
The Milpitas, Calif.-based company's shares dropped 71 cents, or 11.1 percent, to $5.69 in premarket trading on the INET electronic exchange. The shares closed Thursday at $6.40 on the Nasdaq, after trading between $6.11 and $11.27 the past year.
The company surprised analysts by announcing it is ceasing work on a next-generation flash memory test development project, while reporting its fiscal second-quarter results Thursday after the market closed. It also set revenue and profit projections below Wall Street's expectations.
Merriman Curhan Ford & Co. analyst David Duley downgraded the stock to "Neutral" from "Buy," saying the flash-memory project could have added $100 million in annual revenue once in full production.
"Although the stock is at or near a five-year low, until the company can demonstrate higher leverage in the earnings-per-share model and grow orders or revenue more in line with the industry, we believe the stock will have a difficult time seeing price appreciation," he wrote in a research report.
ThinkEquity Partners analyst Suresh Balaraman downgraded the stock to "Accumulate" from "Buy," after lowering profit projections.
The analyst now estimates the company to earn 19 cents per share this year, less than half of a previous prediction of 48 cents per share. Wall Street overall is looking for 24 cents, according to Thomson Financial.
CreditSuisse analyst John Pitzer is maintaining his "Underperform" rating. Liquidity is not an immediate concern for the company, but it needs monitoring, he said in a research report.
Citigroup analyst Timothy Arcuri said he's maintaining his "Hold" rating.
"We simply see no compelling reason to put new money to work here despite the big drop aftermarket," he said in a research report. He said he sees the stock as "dead money."
