Piper Jaffray Reiterates Their Buy Rating on Yingli Green Energy (YGE), Lowers PT

July 9, 2008 10:42 AM EDT

Piper Jaffray reiterates their Buy rating on Yingli Green Energy (NYSE: YGE) but revises their price target from $60 to $45.

The firm said, "Company visit and management meetings reinforce our belief that YGE remains best positioned in solar longer term with the lowest non-silicon processing cost on record (<$0.80/W). Because it has among the highest silicon costs (~2.15/W), YGE is best leveraged to polysilicon price reductions we anticipate beginning in 2H09. YGE can be considered a hedge for polysilicon investments in this regard."

The firm highlighted that while demand in Spain for 2009 remains uncertain, "YGE has sales visibility to 50%+ of its '09 capacity from Germany, Italy, France, Portugal, Belgium, Greece, S. Korea, and certain European island territories." In addition, the 2009 poly supply remains a concern but Piper expects the company will announce additional supply contracts in the second half of 2008, which may alleviate some of these concerns.

Piper believes that YGE's Q2 results should be largely in line with their $0.23/$236M estimates, which are modestly ahead of the consensus estimates. The firm also believes that YGE could raise its 2008 guidance on its Q2 earnings call. However, the firm remains conservative and leaves their FY08/09 estimates unchanged.

Yingli Green Energy Holding Company Limited and its subsidiaries engage in the design, development, marketing, manufacturing, installation, and sale of photovoltaic (PV) products.

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