January 20, 2009, 12:02 pm
MEMC: UBS Cuts Rating; Sees 11-Wk Factory Shutdown
Posted by Eric Savitz
MEMC Electronic Materials (WFR) shares are under pressure after UBS analyst Stephen Chin this morning cut his rating on the stock to Neutral from Buy, setting a short-term Sell rating and chopping his price target to $14.50 from $20. Chin says that semiconductor wafer sales are likely to be “much worse than expected in 2009.”
Chin reports that his checks find the company in Q1 will likely impose an 11-week temporary shutdown of its largest semiconductor wafer factory in Taisil, Taiwan; he estimates that facility produces half of MEMC’s 300mm semiconductor wafer production. He also reported that 300mm wafer sales contracts in Q1 have 20% lower sales prices than in Q4.
Chin writes that he sees MEMC’s gross margin in Q1 down to 20%, from 36% last quarter. He sees spot polysilicon gross margin down to 70% this year, from 90% last year, with prices in the $100/kg range, down from $150 currently.
For 2009, Chin cuts his EPS estimate to $1.45, from $2.35; for 2010, he drops to $1.65, from $2.75. For Q1, he sees sales of $294 million, well below the Street consensus of $404 million.
WFR this morning is down 86 cent, or 5.8%, to $13.90. |
