Shares of Cabot Microelectronics Corporation (NASDAQ:CCMP) are down 11% for the past month after posting 3Q EPS. Its earnings came in at $0.53 (below consensus of $0.63) and revenues missed marginally. As a result, full year 2014 EPS is expected to come in at $2.08 per Wall Street consensus (which is 8% below consensus from just a month ago).
After the sell-off, we're now down 6% since our November article. We still have a two year price target of $70, which puts upside to 70%. The recent sell-off looks to be overdone, with the market focused on the recent weakness and missing the long-term story. Along with 2Q earnings, management noted that revenues in China grew by 40% y/y.
Broadly, we noted in November that:
"...the company is leveraged to one of the fastest growing industries, the manufacture of CMP consumables products. Revenues for this segment are driven by the number of wafer starts by semiconductor manufacturers. Cabot is exposed to all types of semiconductors. What this does is allows Cabot to be inherently less cyclical than its semi-cap equipment peers."
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