AmTech Previews Suntech Power (STP) Q2 Earnings
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American Technology Research is out with a research note this morning previewing Suntech Power Holdings (NYSE: STP) Q2 earnings, which are expected out August 20 before the market open. The conference call for the quarter is expected to begin at 8 AM ET on that day. The firm maintains a Buy rating and $55 price target on shares of Suntech.
The firm expects Suntech to report a strong Q2 given that "industry-wide pricing remained strong" during the quarter that "should continue into 3Q08 due to strength in demand in Spain." AmTech believes investors will be focusing on Suntech's gross margin number and sees strength in Germany during the second half of this year as potentially offseting a decline in average selling prices, consequently boosting margins for Suntech in this constrained poly environment. AmTech said, "Declining long-term contract poly pricing for STP in '09 (guided down 20%) in addition to Pluto efficiency contribution should provide a positive margin outlook. Heavy Pluto contribution is expected in FY2010."
AmTech expects Suntech to hint at a healthy ASP outlook for the second half of this year, but believes that management will stay conservative in its guidance due to "the expense of spot poly and lack of clarity in Spain and the US on the legislative front."
Finally, AmTech believes Suntech has not seen a substantial impact from MEMC Electronic's (NYSE: WFR) production shortfall at the end of its Q2. AmTech is currently modeling "blended ASP's down 12% y/y for Suntech in 2009" and notes that more favorable comments about the outcome could be viewed as an incremental positive.
Suntech Power Holdings Co., Ltd. designs, develops, manufactures, and markets various photovoltaic (PV) cells and modules to provide electric power for residential, commercial, industrial, and public utility applications worldwide.
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