North Coast Solar Stocks

November 10, 2009

Energy Conversion Devices: Citi, J.P. Morgan Downgrade

Filed under: ENER — Tags: , , , — Jason @ 10:49 am

By Eric Savitz
barrons.com

Energy Conversion Devices (ENER), which yesterday posted Q1 results that fell short of expectations and suspended its guidance, today was hit with a pair of analyst downgrades.

* Citigroup analyst Timothy Arcuri cut his rating on the stock to Sell from Hold, with a new target of $7, down from $12. (The stock closed yesterday at $10.93.) He notes that the company has about 7.5 months of finished good inventory at current ship rates, and maintains prices above peers. The company, he says, faces a “nasty trade-off” as result – keep prices high with low volume, or cut prices and burn cash. He warns that net cash, neutral now, is headed to a $3-$4 a share deficit by the end of 2010. Gross margin will hover at about zero for the news few quarter, he says. He sees losses of $1.64 a share in FY 2010, $1.97 in FY 2011 and $1.94 in FY 2012.
* J.P. Morgan analyst Christopher Blansett cut his rating to Neutral from Overweight, with a new target of $15, down from $26, conceding that his “investment thesis has not played out.” He had thought that the company’s focus on the BIPV (building integrated voltaics) market would help the company weather the difficult solar market; but he says weaker-than-expected demand for commercial solar installations is limiting BIPV sales. He also thinks the inventory build is “concerning.”

ENER today is off 26 cents, or 2.4%, to $10.67.

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