Citigroup (NYSE:C) Says Veeco Instruments (Nasdaq:VECO) Peaking

Citigroup Inc. (NYSE:C) cut their price target and rating on Veeco Instruments (Nasdaq:VECO), citing probable removal of subsidies and orders for the company peaking in 2011.

Citi said, "With China's installed base having grown to about 325 tools by 2010 and (about) another 200 tools sitting in backlog as of 2010, China has placed enough orders to grow the installed base to about 525 or slightly more."

The company will probably peak in the current quarter and the first quarter of 2011, said the financial giant. The existing subsidy will probably be removed sometime in the first half of 2011.

The peak is expected because of customers pushing to take advantage of the subsidy before it's removed.

Citi analyst Timothy Arcuri concluded this will result in "creating what is likely a big falloff in orders moving through 2011, ... Customers, we think, are starting to see it too and are trying to pull in big follow-on orders to beat any forthcoming change."

Veeco plunged to $43.67, down $6.30, or 12.61 percent, as of 1:33 PM EST. Citi lowered their price target on them from $52 to $50.