UPDATE: Topeka Capital Markets Upgrades Cabot Microelectronics on Better Growth Position

In a report published Wednesday, Topeka Capital Markets analyst Chris Kapsch upgraded Cabot Microelectronics (NASDAQ: CCMP) from Hold to Buy, and raised the price target from $38.50 to $44.00.

In the report, Topeka Capital Markets noted, “We are upgrading our rating on CCMP from Hold to Buy. We now believe growth can accelerate modestly in fiscal 2014, even against a subdued chip industry end-market backdrop, on greater CMP pad penetration, and continued success with slurries for aluminum high-k metal gate and advanced dielectric polishing. We are now forecasting a slightly higher gross margin assumption for FY14, a function of improved mix and the potential for sustained benefit from a weaker Yen. Accordingly, we are increasing our FY14 estimate higher, to $2.35 per share from $2.25. We also find CCMP's consistently strong excess FCF generation attractive, and with net cash again accumulating on its balance sheet, we expect more aggressive share repurchase activity and/or the establishment of a regular dividend could be under consideration. We are bumping our price target to $44 from $38.50. With 20+% upside from current levels, our Buy recommendation is warranted.”

Cabot Microelectronics closed on Tuesday at $36.36.