North Coast Solar Stocks

May 20, 2009

JA Solar: Despite Rotten Q1, Broadpoint Upgrades To Buy

Filed under: JASO — Tags: , , , , , — Jason @ 11:39 am

Posted by Eric Savitz

JA Solar (JASO) shares are getting a big lift today from Broadpoint.Amtech analyst John Hardy, who this morning upped his rating on the stock to Buy from Hold.

As I noted yesterday, JASO reported much weaker than expected results for the first quarter, and said full year results won’t meet previous guidance.

But Hardy notes that the company said pricing has begun to stabilize, with shipments in Q2 expected to double sequentially. He sees further improvement in Q3, with utilization rates rebounding to about 70% from just 15% in Q1. Hardy also says margins should improve dramatically as utilization rates improve and the company works through high-cost polysilicon inventory.

Hardy also contends that the company’s balance sheet “remains healthy enough to ride out the storm” despite spikes in days sales outstanding and inventory.

His conclusion: module pricing is beginning to stabilize as financing shows initial signs of improvement. He raises his price target to $5 from $4, based on 10x his estimates 2010 EOS estimate of 46 cents. “While JASO remains speculative in the midst of a weak demand environment, we believe the risk/reward is now favorable,” he writes.

JASO today is up 47 cents, or 14.7%, to $3.66.


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