Brean Murray Carret & Co. Cuts Price Target on LDK Solar (LDK), Still Bullish On Second Half

June 8, 2011 7:37 AM
Brean Murray Carret & Co. is maintaining its Buy rating on shares of LDK Solar (NYSE: LDK), but is lowering its price target from $20 to $12 on following Q1 results.

The company reported mixed Q1 results with EPS topping the Street's estimates slightly and revenues falling just short. Q1 shipments were in-line with guidance with 631.5 MW of wafers and 118.7 MW of modules.

LDK released its Q2 guidance weaker than expected with a revenue range of $710-$760 million, well below the firms estimate of $777 milllion and the Street's of $771.68 million. Wafer shipments are forecasted to be between 500-550 MW versus Brean Murray Carret's estimate of 685 MW.

The company announced that module shipment growth quarter-over-quarter was expected to be around 80 percent and released its guidance at 200-220 MW. The increase is due to higher demand.

While gross margin for the quarter rose 4.2 percent quarter-over-quarter to 31.5 percent, LDK anticipates that Q2's gross margin will fall between 22 and 26 percent. The firm believes that gross margin will bounce back in the second half of the year.

Demand is picking up in Italy with shipments expected to be really strong in Q3. The LDK announced that pricing is beginning to stabilize while order demand is growing.

An analyst at the firm Comments, "we believe that the strong correction in the company's stock price reflects the deterioration in pricing, which is driving the lower margin guide in Q2. However, we also thing this is one time in nature, as the company ramps its poly capacity and continues to drive costs lower."

For more ratings news on LDK Solar click here and for the rating history of LDK Solar click here.

Shares of LDK Solar closed at $7.10 yesterday, with a 52 week range of $4.97-$15.10.


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