Veeco downgraded to Hold from Buy at Needham

Needham downgraded Veeco (VECO) to Hold from Buy without a price target after the company entered into a merger agreement with Axcelis (ACLS). Needham sees both merits and risks in the deal. The two companies coming together creates the “much-needed scale” and provides synergies over the long term, the analyst tells investors in a research note. However, Needham believes Veeco has more tangible artificial intelligence tailwinds from storage and power. As such, its investors could see the merger reducing the company’s AI leverage and diluting near-term growth, contends the firm. Needham also sees China approval risk as a share overhang into the expected deal closing.