MEMC Electronic Closes Down 4.7%, Analysts See Grim 1st QtrLast update: 1/21/2009 4:30:20 PM
By Aja Carmichael Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Shares of MEMC Electronic Materials Inc. (WFR) fell as much as 10% in regular-session trading after analysts said they expect weakness in the company's first quarter as the semiconductor and solar sectors continue to be challenged amid frozen credit markets.
Citigroup analyst Timothy M. Arcuri lowered his investment rating to hold from buy, saying the company's biggest solar contracts are being challenged. He sees the company losing money in the semiconductor sector the first quarter of this year and building significant amounts of inventory, which could take three to four quarters to fully unwind.
"While semi weakness is largely known, it is equally tough to see a buy catalyst until the dust settles around these issues, particularly solar contracts," wrote Arcuri in a research note. Shares of MEMC Electronic closed down 4.7% to $12.79. In the trading session, the stock declined 10% and hit a intraday low of $12.04. Shares of the company have fallen 80% in the last 12 months and is off 38% over the last three months.
The company is expected to report fourth-quarter earnings Thursday after the closing bell. Analysts polled by Thomson Financial expect the company to report earnings of 61 cents a share. Analysts' estimates typically exclude unusual items.
In a note to clients, Soleil analyst Paul Leming wrote the key issue investors will be management's guidance for the first quarter and full year 2009, instead of fourth-quarter results. "We expect the commentary [on the company's outlook] to be very poor," said Leming, maintaining his buy rating. "Conditions in the semiconductor industry continue to deteriorate - volume levels have not stabilized but continue to fall in January."
He adds pricing in semiconductor wafers is under extreme pressure and credit markets appear to remain frozen, which is likely to continue to constrain demand in the solar industry through at least the first half of 2009.
Meanwhile, Oppenheimer analysts Sam Dubinsky said he expects the company to report very difficult fourth-quarter earnings and guidance as both semiconductor and solar demand are struggling against a tough economic backdrop.
"The Street continues to revise estimates downward, though we believe numbers are still too high," wrote Dubinsky. "With macro deteriorating further, another numbers reset should not be surprising."
In December, MEMC Electronic lowered its already reduced fourth-quarter revenue guidance in the range of $400 million to $425 million.
The company previously forecast $500 million in revenue, plus or minus $25 million. Analysts' latest estimates are for revenue in the range of $398 million to $425 million.
-By Aja Carmichael, Dow Jones Newswires; 201-938-5218, aja.carmichael@dowjones.com; (END) Dow Jones NewswiresJanuary 21, 2009 16:30 ET (21:30 GMT) |
