Collins Stewart Downgrades Suntech Power (STP) to Sell; 2Q11: Costs and Expenses Exceed Expectations

Collins Stewart downgraded Suntech Power (NYSE: STP) to Sell with a price target of $4.00.

Collins analyst says, "We lower our rating on STP to Sell due to our belief that it will be difficult for the company to create value for its shareholders in the year ahead and its being viewed as particularly susceptible to ASPs. In the current falling price environment, STP's relatively high expense levels, including relatively inflexible interest expenses, will continue to pressure margins. Our CY12 EPS forecast is reduced to $0.40 from $0.77. Given the mid-single digit P/E multiples common in the solar industry and STP's $1.67B negative net cash balance, this level of EPS does justify our prior $5.50 price target. The company needs to meaningfully reduce its costs and expenses in the year ahead and to focus on debt reduction."

For more ratings news on Suntech Power click here and for the rating history of Suntech Power click here.

Shares of Suntech Power closed at $5.07 yesterday.

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