DA Davidson & Co Downgrades Ceradyne to Neutral, Cuts PT to $36

DA Davidson & Co lowers its rating on Ceradyne (NASDAQ: CRDN) to Neutral from Buy and cuts its price target by $5 to $36 on weak solar business and lower armor margins that weigh on outlook.

DA Davidson & Co comments, "While revenues from the solar crucible business are expected to be ~$72 million in CY11, this business is expected to decline to ~$44 million in CY12. While weakness in the solar business is not new news, we were modeling higher year-over-year solar revenues in CY12. ...Management also noted some delays in body armor shipments that could impact Q4, but we expect the recently announced (in September 2011) $127 million sustainment order for Enhanced Small Arms Protective Inserts (ESAPI) to provide some revenue stability in 2012. However, given the ASP erosion on the armor front, we expect some margin degradation in the armor business in 2012."

CRDN closed at $31.41 a share on Monday.