Piper Jaffray Raises Price Target on Evergreen Solar (ESLR) to $16

June 20, 2008 9:17 AM EDT

Piper Jaffray reiterates its Buy rating on Evergreen Solar (Nasdaq: ESLR) and raises its price target on the stock from $14 to $16. Closing at $12.30 yesterday, the firm's price target represents a potential return of 30%.

After attending Evergreen's analyst day yesterday, the firm has become more confident in the company's "ability to lower its cost structure and remain competitive, as well as achieve significant earnings power upon ramp completion in 2009." Piper notes that Evergreen's management was upbeat on 1. its $1.7 billion backlog, 2. its silicon utilization cost advantages, 3. its capacity expansion plans, and 4. its cost reduction roadmap.

Piper sees Evergreen's lower silicon costs, compared to other leading Chinese companies, as a key differentiator that will keep it competitive despite worldwide polysilicon output that could increase over the next several years.

Furthermore, Evergreen management indicated that its Devens ramp remains on track and Piper notes that Phase 1 should be at full capacity (80MW) by Q109, with Phase 2 running at full capacity (80MW) by Q409. Evergreen also indicated that it currently does not have enough capital to complete this ramp and will likely need to raise $250-$300 million to finish this process. Finally, the firm mentions that Evergreen is interested in further expanding capacity by about 500MW in Southeast Asia and could raise about $400 million during 2009.

The firm's raised price target on Evergreen is the result of an increase in its target multiple from 25x to 27x its FY09 EPS estimate of $0.57. Notably, Piper sees a FY08 loss of $0.11. The Street estimates are currently ($0.22) for FY08 and $0.46 for FY09.

Evergreen Solar, Inc. develops, manufactures, and markets solar power products primarily in Europe and the United States.

Related Categories

Analyst Comments
Insiders' Blog

Stocks Mentioned

Related Entities

• Piper Jaffray

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?