Maxim Group Maintains a 'Sell' on Suntech Power (STP); Despite Strong Shipment Outlook, Losses and Debt Continue Growing

May 24, 2012 9:31 AM EDT Send to a Friend
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Price: $0.53 --0%

Rating Summary:
    1 Buy, 11 Hold, 16 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 24 | Down: 28 | New: 14
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Maxim Group maintains a 'Sell' on Suntech Power (NYSE: STP) price target cut from $1.50 to $0.50.

Analyst, Aaron Chew, said, "Following steep 1Q downside punctuated by $45m in provisions, STP foresees a 20% Q/Q rebound in shipments but gross margins stuck at ~5% in 2Q. With no end in sight for EPS and free cash flow losses, we foresee material risk to equity deflation and/or dilution and lower our price target."

"Though making tremendous strides at lowering its production costs, STP faces a huge challenge keeping up with its low-cost peers and steady ASP pressures. While it targets module costs of <$0.75/W by 2012YE ($0.60/W processing and ~$27/kg poly), this is 10% higher than the $0.60/W forecast of Trina Solar (NYSE: TSL)(Hold) and essentially in line with our 4Q12 module ASP forecast of $0.78/W, suggesting no end in sight for steep net losses and cash burn."

For an analyst ratings summary and ratings history on Suntech Power click here. For more ratings news on Suntech Power click here.

Shares of Suntech Power closed at $2.02 yesterday.


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