Q1 Preview: LDK Solar (LDK) Might See Dark Clouds as PV Prices Bulge

LDK (NYSE: LDK) is hanging comfortably in positive territory Tuesday afternoon ahead of its first-quarter earnings report, due out after the market close.

First, here are recent quarterly results from some of LDK's peers to get perspective on what the quarter might hold:

• Suntech Power (NYSE: STP) - EPS of 17 cents on revs of $899 million, mixed to consensus views calling for EPS of 36 cents and revs of $864.82 million. Shipments fell 3.1 percent;
  
  
• SunPower Corp. (Nasdaq: SPWRA) - EPS of 15 cents on revs of $451 million, missing consensus estimates calling for EPS of 17 cents and revs of $480.46 million;
  
  
• Trina Solar Ltd. (NYSE: TSL) - EPS of 63 cents and revs of $550.9 million. Consensus was looking for EPS of $1.05 and revs of $584.6 million; and
  
  
• Yingli Green Energy (NYSE: YGE) - EPS of 38 cents with revs of $527.3 million, missing consensus views calling for net earnings of 39 cents on revs of $573.46 million. Yingli notes that PV module shipments decreased in the low-teens for the quarter.

LDK is expected to report EPS of 86 cents and revenue of $769.45 million. In late April, LDK cut its first-quarter sales estimate from $800 - $850 million to $745 - $755 million. LDK also tightened its shipment outlook downward, from 610 - 660-MW to 625 - 635-MW.

Analysts are equable heading into the release, with Bloomberg data showing seven have a Buy rating on the shares, 10 have a Hold, and five maintain a Sell. The analyst price target average is $14, with a low of $6 and high of $25. LDK has traded in a range of $4.97 to $15.10 over the last 52-weeks.

Analyst Commentary

• Wells Fargo is expecting a disappointing quarter from LDK. The firm sees LDK trading mostly on balance sheet commentary given its delayed debt offering. Wells notes LDK had debt of $1.8 billion and negative working capital of $1.6 billion, based on data from the fourth quarter. Wells values the shares at $6 - $7 per.
  
  Wells sees revs of $753.1 million and fully diluted EPS of $0.74.
  
  
• Kaufman Bros. sees EPS of $0.86 and revs of $750 million. The firm notes its revenue estimate "to lower sales volumes and modest price declines assumed in the wafer and module segments. In the poly segment, expected to be LDK's higher margin business in 1Q, Kaufamn believes the company capitalized on a constrained environment in the quarter." The firm modeled for a 41 percent increase in volumes.
  
  Kaufman modeled for $68 per kilogram, but fears LDK may have realized price points north of $90 per kilo for polysilicon.
  
  
• Collins Stewart sees EPS of $0.87 with $755 million in revs. "Independent channel checks and the recent media reports indicate wafer price have declined to $0.60-0.70/w in recent days, well below the $0.84/w that had been embedded in our 2Q11 LDK forecast...Being highly exposed to the spot market, LDK is expected to experience the ASP decline over the later weeks of 2Q11." Collins also believes that LDK's recently lowered guidance is still too optimistic for FY11.

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.

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