Collins Stewart Maintains Sell Ratings On Suntech Power (STP) and Solarfun (SOLF)
According to StreetInsider.com,Collins Stewart is maintaining its Sell rating on both Suntech Power(STP) and Solarfun (SOLF) but raising its price targets on both. It’sraising the price target on STP from $6.50 to $10 and raising the pricetarget on SOLF to $3.
Collins analyst says, “Our CY09 forecast calls for STP generate$1.73B in sales and EPS of $0.20, both of which are below the consensusof $1.86B and $0.40. Our forecast is based on module ASPs falling toaverage $2.37/watt for the year, down from an estimated $3.83/watt inCY08. Recent channel checks have STP module ASPs already in the$2.40-2.50/watt range. STP s wafer prices are assumed to decline,though we note that its large contract with MEMC is likely$0.0.20-0.40/watt about market at this point and will weigh on STP’s GMunless further renegotiated. STP may incur a variety of one-time gainsand charges in 1Q09 related to the repurchase of debt at a discount andpotentially inventory write downs…We maintain a sell rating on STP aswe believe its earnings will remain depressed throughout CY09 and thatits valuation is well above its peers.”
“We maintain a Sell rating on SOLF, but have raised our PT to$3. Our price target is based on a 9x P/E applied to our CY10 EPSforecast of $0.34. The primary risk to our Sell rating is SOLF beingacquired at a premium. Good Energies II LP owns approximately a 36.4%stake in SOLF and has investments in other solar assets such as TrinaSolar (NYSE: TSL)and Q-Cells. It is possible that Good Energies may be able to arrangemerger of SOLF with some other business at a price above currentlevels. The other primary risk to our Sell rating would be astronger-than-expected recovery of the solar market in 2H09.”
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