Jefferies Cuts Suntech (STP) Target 17% Following Q3 Preannouncement; FX, Severance Offset Otherwise Good Numbers
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Jefferies cut it's price target on Suntech Power Holdings (NYSE STP) by about 17 percent, from $3.00 to $2.50, while keeping an Underperform rating on the stock.
Citing third-quarter shipment and revenue pre-announcements, Jefferes comments that numbers imply better than expected ASP of ~$1.35, and that "these strong metrics were largely offset by severance expense and FX losses during the quarter."
Suntech preannounced shipment growth of 15 percent sequentially, which was in-line with prior guidance. For revenue, Suntech expects $800 million in the third-quarter, compared with $794 million at Jefferies and $778 million by the consensus. Suntech also expects to incur a $10 million charge from severance expenses in second-quarter 2011, and a significantly larger than expected non-cash FX loss.
On Suntech's balance sheet, which the company didn't discuss, Jefferies comments, "STP is accelerating their plan to reduce opex by at least 20 percent by 2012, hold capacity expansion in 2012, and improve working capital by $200 million by [the end of fiscal 2011]. As of the second-quarter, Suntech had $2.4 billion of debt and $768 million of cash. Working capital $48 million of cash, and total cash from operations was $2 million. Second-quarter capex was $120 million."
Following the report, Jefferies is adjusting some numbers. Fiscal 2011 revs move from $3.230 billion to $3.187 billion, and 2012 revs from $3.637 billion to $3.510 billion. For 2011, Jefferies loss estimate moves from 12 cents to 44 cents per share, and 2012 EPS goes from 52 cents to 45 cents.
For an analyst ratings summary and ratings history on Suntech Power click here. For more ratings news on Suntech Power click here.
Shares of Suntech Power closed at $2.60 yesterday.
Citing third-quarter shipment and revenue pre-announcements, Jefferes comments that numbers imply better than expected ASP of ~$1.35, and that "these strong metrics were largely offset by severance expense and FX losses during the quarter."
Suntech preannounced shipment growth of 15 percent sequentially, which was in-line with prior guidance. For revenue, Suntech expects $800 million in the third-quarter, compared with $794 million at Jefferies and $778 million by the consensus. Suntech also expects to incur a $10 million charge from severance expenses in second-quarter 2011, and a significantly larger than expected non-cash FX loss.
On Suntech's balance sheet, which the company didn't discuss, Jefferies comments, "STP is accelerating their plan to reduce opex by at least 20 percent by 2012, hold capacity expansion in 2012, and improve working capital by $200 million by [the end of fiscal 2011]. As of the second-quarter, Suntech had $2.4 billion of debt and $768 million of cash. Working capital $48 million of cash, and total cash from operations was $2 million. Second-quarter capex was $120 million."
Following the report, Jefferies is adjusting some numbers. Fiscal 2011 revs move from $3.230 billion to $3.187 billion, and 2012 revs from $3.637 billion to $3.510 billion. For 2011, Jefferies loss estimate moves from 12 cents to 44 cents per share, and 2012 EPS goes from 52 cents to 45 cents.
For an analyst ratings summary and ratings history on Suntech Power click here. For more ratings news on Suntech Power click here.
Shares of Suntech Power closed at $2.60 yesterday.
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