Morgan Joseph Cuts Price Target on China Hydroelectric Corporation (CHC) Following Poor Q1 Results

Morgan Joseph is maintaining its Buy rating on shares of China Hydroelectric Corporation (NYSE: CHC), but is lowering its price target from $15 to $13 following poor Q1 results.

The company released its Q1 results with sales of $11.5 million and a gross profit of $4.1 million when the firm was forecasting sales of $15.3 million and gross profit of $9.9 million. The firm notes that the lower-than-expected utilization rates, caused by low levels of precipitation, impacted sales and EPS for the March quarter.

The firm comments, "We continue to believe management is committed to fully leveraging the balance sheet, but note that recent monetary tightening efforts by the Chinese government may impact the rates and speed at which China Hydro may receive debt financing, reducing the pace at which new projects are acquired."

Morgan Joseph cut its FY11 and FY12 revenue estimates from $80.2 million and $92.1 million to $71.4 million and $85.8 million. The firm is also lowering its FY11 and FY12 EBITDA estimates from $59.9 million and $68.1 million to $49.7 million and $62.2 million.

For more ratings news on China Hydroelectric Corporation click here and for the rating history of China Hydroelectric Corporation click here.

Shares of China Hydroelectric Corporation closed at $4.86 yesterday.

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