North Coast Solar Stocks

May 28, 2009

China Sunergy downgraded

Filed under: CSUN — Tags: , , , , — Jason @ 8:03 am

Analyst downgrades China Sunergy to ‘Hold’ on market position, pricing pressure

Thursday May 28, 2009, 8:03 am EDT

NEW YORK (AP) — China Sunergy Co. Ltd.’s (CSUN) lack of vertical integration will constrain the solar cell maker’s margins, said an analyst as he downgraded the company’s stock on Thursday.

Jefferies & Co. analyst Paul Clegg said that despite the company’s strong cell technology and stable liquidity position, he believes that its strategic position in only one segment of the value chain could hamper its growth in an increasingly competitive environment.

“We believe that the ability to directly appraise end-market demand opportunities and to nimbly shift product between different market channels will become an increasingly important differentiator of successful business models,” Clegg said. He noted that China Sunergy’s first-quarter average selling prices were weaker than its peers’, likely because of the company’s lack of direct access to end markets, forcing more severe price reductions to move its product.

The China-based company on Wednesday reported a loss of $15.9 million, or 40 cents per share, for the period ended March 31. Excluding share-based compensation and a change in fair value of foreign currency derivatives, the company’s first-quarter adjusted net loss came to $13.2 million, or 33 cents per share.

In a survey by Thomson Reuters, analysts predicted a loss of 26 cents per share. Analysts typically exclude nonrecurring items from their estimates.

Clegg said he expects ongoing price pressure, so he lowered his full-year estimate to a loss of 40 cents per share, compared with a previous forecast for a loss of 18 cents per share.

Clegg downgraded China Sunergy’s stock to “Hold” from “Buy” with a price target of $4. Shares of the company closed at $3.99 on Wednesday.

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