January 21, 2009, 10:46 am
MEMC: Citi Downgrades On Solar Woes; Slashes Ests
Posted by Eric Savitz
MEMC Electronic Materials (WFR) is down again today, this time following a downgrade of the shares by Citigroup analyst Timothy Arcuri. Today’s move follows a downgrade of the shares yesterday by UBS analyst Stephen Chin.
Arcuri cuts his rating to Hold from Buy; he halves his price target to $15, from $30. He gives three reasons for the more cautious stance on the company, which provides silicon wafers and raw polysilicon to the semiconductor and solar sectors:
The company’s biggest solar contracts “are being challenged,” and now have “material risk in terms pricing,” and to a lesser extent, volume.
The EPS run rate coming out of calendar Q1 looks closer to $1 than the previous estimate of around $2.
He sees WFR losing money in semis in Q1, while building inventory that could take 3-4 quarters to unwind.
Arcuri chopped his 2009 EPS estimate to $1.16, from $2.09; for 2010, he goes to $2.14, from $3.44. |
