Maxim Group Starts Yingli Green Energy (YGE) at Hold, $8 Price Target
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Price: $1.43 --0%
Rating Summary:
2 Buy, 11 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
2 Buy, 11 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Maxim Group initiates coverage on shares of Yingli Green Energy (NYSE: YGE) with a Hold rating and $8 price target.
The firm reports that YGE may be able to survive in a $1/W world, but will not be able to strive at all. Maxim's 2011 and 2012 EPS estimates are $1.16 and $1.20.
The company has been unable to generate free cash flow on the same level that its peers have. The firm believes that the company will continue to drain its free cash flow as it estimates $1 billion in CAPX
An analyst at the firm comments, "Following the collapse in poly prices, YGE’s internal production cost of $65/kg exceeds spot prices of ~$50/kg. Not only would the scale likely needed to bring costs below $30/kg require $720m in investment, but we estimate investment in polysilicon capacity would only yield a positive IRR with prices above $60/kg."
Based on the normalized economics, the firm forecasts in a $1/W world, higher volumes are more than offset by lower margins. With a $0.81 cost/W and 18.5 percent gross margin, EPS would end up being $0.85, 40 percent below 2010.
For more ratings news on Yingli Green Energy click here and for the rating history of Yingli Green Energy click here.
Shares of Yingli Green Energy closed at $8.71 yesterday.
The firm reports that YGE may be able to survive in a $1/W world, but will not be able to strive at all. Maxim's 2011 and 2012 EPS estimates are $1.16 and $1.20.
The company has been unable to generate free cash flow on the same level that its peers have. The firm believes that the company will continue to drain its free cash flow as it estimates $1 billion in CAPX
An analyst at the firm comments, "Following the collapse in poly prices, YGE’s internal production cost of $65/kg exceeds spot prices of ~$50/kg. Not only would the scale likely needed to bring costs below $30/kg require $720m in investment, but we estimate investment in polysilicon capacity would only yield a positive IRR with prices above $60/kg."
Based on the normalized economics, the firm forecasts in a $1/W world, higher volumes are more than offset by lower margins. With a $0.81 cost/W and 18.5 percent gross margin, EPS would end up being $0.85, 40 percent below 2010.
For more ratings news on Yingli Green Energy click here and for the rating history of Yingli Green Energy click here.
Shares of Yingli Green Energy closed at $8.71 yesterday.
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