Verigy Slides As Barclays Backs Off Bullish Stance

Verigy (VRGY) shares are down sharply today after Barclays Capital analyst C.J. Muse cut his rating on the stock to Equal Weight, from Overweight. The move follows the company’s earnings report late yesterday for the fiscal third quarter ended July31.

Muse, who keeps his $14 price target, noted in a research report that the October guidance was slightly worse than the consensus, and likely disappointed some bulls. The forecast is for revenue of $90 million to $100 million, and a GAAP loss of 17-25 cents a share; the Street had expected $94.2 million and a loss of 18 cents.

The downgrade, Muse writes, reflects concerns about the sustainability of demand from the wireless and graphics sectors, increasing costs in connection with the company’s Touchdown Technologies acquisition and “uncertainty around management’s potential plans for recent cash raised in a covert offering.”

Muse says these headwinds “will limit upside potential” for the stock.

VRGY today is down $1.31, or 10.7%, to $10.92.

Disclosure: Verigy is a spin-off from Agilent (A), where my wife was formerly employed. We are holders of Agilent shares, and received Verigy shares in the spin-off.