UPDATE 1-Energy Conversion shares fall as customer cuts outlook
Tue Sep 23, 2008 2:28pm EDT
reuters.com
By Adveith Nair
BANGALORE, Sept 23 (Reuters) - Shares of alternative energy technology company Energy Conversion Devices Inc (ENER.O: Quote, Profile, Research, Stock Buzz) fell 17 percent on Tuesday, after one of its largest customers lowered its outlook.
Earlier in the day, Solar Integrated Technologies Inc (SIT.L: Quote, Profile, Research, Stock Buzz) cut its 2008 revenue outlook, saying its U.S. market was being "adversely impacted" by the pending expiry of the Investment Tax Credit and tightening credit markets. [ID:nLN215157]
Energy Conversion shares fell $11.54 to $57.75 in afternoon trade, making them one of the biggest percentage losers on Nasdaq. About 4.3 million shares changed hands in intraday trading, about 1.8 times the 50-day moving average volume of the stock.
Analysts attributed the share price decline to the outlook cut by Solar Integrated, one of the company's major customers, but said it was unlikely the lowered outlook would hurt Energy Conversion significantly.
Jefferies & Co analyst Paul Clegg said the impact of the outlook cut was probably not significant on Energy Conversion's entire fiscal year 2009 as the company could likely redeploy any back-up in module deliveries at decent prices.
"The question is how fast could they do so and would that have any impact on delaying a certain portion of expected near-term revenues to later FY 2009 quarters," said Clegg, who has a "buy" rating and a $96 price target on the stock.
Calyon Securities analyst George Kotzias said it was unknown as to what percentage of Solar Integrated's reduction in outlook would involve Energy Conversion's products.
"A lot of the contracts are take-or-pay contracts, so I would be surprised if there is an exact one-to-one correlation," Kotzias said. He has a "buy" rating and a $85 price target on the stock.
Energy Conversion's "take-or-pay" contract agreements require customers to purchase a specified minimum amount of products or pay penalties if they do not buy it. (Editing by Deepak Kannan) |
