Credence Soars on Narrower Fourth-Quarter Loss

Shares of chip test equipment maker Credence Systems soared in afternoon trading after the company posted a significantly smaller fourth-quarter loss and named a new chief executive officer.

On Thursday, the Milpitas, Calif.-based company posted a fourth-quarter loss of $1.9 million, or 2 cents a share, narrowed from $22.5 million, or 23 cents a share, last year.

The company also said Chief Executive officer Dave Ranhoff stepped down and would be replaced by Lavi Lev, a semiconductor industry veteran who previously held positions at National Semiconductor, Intel and Sun Microsystems.

Needham & Co. analyst Robert Maire lifted his rating on the stock to "Buy" from "Hold" with a $7 price target, but he hardly gave the stock a gushing endorsement.

"While things are far from being good, the downward spiral has reversed and we are at a level of business that is in the black," Maire wrote in a note to investors. "Our view is that the near-term business opportunities are enough to sustain the company until we see an uptick in the overall tone of the market."

Goldman Sachs analyst James Covello was made equally tepid comments.

"Despite solid results and guidance from Credence, we do not recommend the stock as it is down 43 percent year-to-date but it is up 116 percent off its August lows and has rallied 20 percent month to date...," Covello wrote in a note.

He added that the company may be vulnerable to inventory build in the supply chain, which could result in weak semiconductor fundamentals. He also believes there may be a 50 percent downside to his $2.30 price target.