North Coast Solar Stocks

April 3, 2009

Solar: Canaccord Starts STP, SPRWA At Hold; ESLR At Sell

Filed under: ESLR, SPWR, STP — Tags: , , , , , — Jason @ 11:28 am

Posted by Eric Savitz

Canaccord Adams analyst Jonathan Dorsheimer this morning launched coverage of three solar stocks – Suntech (STP), SunPower (SPWRA, SPWRB) and Evergreen Solar (ESLR) – taking a cautious stance on each. Here’s a quick rundown on his calls:

* Suntech: He starts with a Hold rating and $12 target price, below yesterday’s close at $13.95. “Suntech has among the industry’s largest capacity and production,” he writes. “However the company’s history was slightly marred as was forced into the pricey polysilicon spot market in 2008 and took on significant debt to fuel its growth.” Near-term, he sees risks of accounts receivable writedowns related to excess channel inventories. “Checks indicate that certain large customers throughout the industry have taken inventory and will pay current market prices, rather than the prices for which the panels were booked,” he writes. He also notes that the company “has incurred large amounts of short- and long-term debt relative to its cash and equity,” and that another key to the story could be its ability to renegotiate its silicon supply contracts.
* SunPower: He launches with a Hold rating and $23 target, below yesterday’s close at $25.56. He notes that management has “telegraphed that Q1 will be difficult,” and contends that Street estimates are too high. “The possibility for a miss may be reflected in the shares, but the recent run-up in price suggests prudence is warranted.”
* Evergreen Solar: He starts with a Sell rating and $1.75 target; the stock closed yesterday at $2.30. “While Evergreen’s technology has always promised to create a significant manufacturing cost advantage, it has so far proven to be a slower ramp and has required 2x the capital over similar peers to set up,” he writes. “Further, we believe the financial benefits of string ribbon technology in today’s declining polysilicon environment has lessened to the point where recouping the lost time capital require to develop the technology may be difficult.”


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