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Tuesday, December 28, 2010

Kemet (NYSE:KEM) Margins Improve on Tantalum, Ceramic Segments

With their Tantalum and Ceramic margins operating at the highest levels in a decade, Deutsche Bank (NYSE:DB) launched coverage on Kemet (NYSE:KEM) with a "Buy" rating.

Deutsche said, "The company is a turnaround story, with the Tantalum and Ceramic segments now operating at 10-year high margins, and more improvements to come in the F&E segment. Despite a strong position in tantalum capacitors and improving operating margins, KEM trades at a discount to peers AVX and Vishay. We see this as an opportunity. Negative risks to our Buy rating include capacity increases by competitors, substitution of tantalum by other dielectrics, increases in raw material costs, and the inability to realize benefits from the F&E restructuring program."

Kemet closed Monday at $13.50, gaining $0.54, or 4.17 percent. Deutsche has a price target of $16 on them.

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