Last week the news for Advantest Corp. (NYSE:ATE) was positive as the Nikkei Shimbun reported the firm expected a 7% increase in net profit over its estimate for the quarter just ended. However, Credit Suisse's take on the company for the 2nd half of '06 is negative as it downgraded Advantest in a report yesterday from "outperform" to "neutral." The downgrade was accompanied by a reduced target share price of 14,300 yen, a reduction of 17% from 17,250 yen. Credit Suisse's main concern is over a slowing of orders and demand for Advantest's test equipment in the second half after a flood of orders for the first six months of this year. This couldn't have come at a better time because even though Advantest's ordinary shares (Tokyo: 6758) opened lower and traded off as much as 2.5% in morning trading, by the end of the day Advantest found itself caught up in a market wide bargain hunting buying spree. Advantest closed at 14,230 yen(-0.42%).
Using a currency conversion rate of Y117.6/US$1, Advantest's closing price today in Tokyo equals $121.00. Its ADRs were originally listed at a 4:1 ratio to its ordinary shares so that figure equals $30.25. This is pretty close to its ADR's close of $30.13 yesterday. Credit Suisse's previous price target of 17,250 equals $147 but its new target leaves very little upside expectation.
ATE 1-yr chart: