Jefferies Cuts Price Targets on MEMC Electronic Materials (WFR) Following Plans Restructure

Jefferies is reiterating its Underperform rating on shares fo MEMC Electronic Materials (NYSE: WFR) and is lowering its price target from $5.00 to $3.50 following the company's plans to restructure.

The new plan will cost the company between $1.125 billion and $1.375 billion and result in the reduction of roughly 20 percent of the company's workforce worldwide.

An analyst at Jefferies comments, "MEMC's plan to combine the Solar materials and SunEdison business signals that MEMC will downplay its wafer business, which we believe is a positive. The huge write-downs and capacity reductions are one of the de-risking catalysts that we look for in reaching the bottom and setting the stage for a recovery."

The firm also believes investors will continue to undervalue shares due to the company's unprofitable wafer business, the weak market conditions, and investors misunderstanding the SunEdison’s sale-leaseback business.

For FY11 and FY12, Jefferies slashed its EPS estimates from ($0.37) and ($0.15) to ($6.05) and ($0.24). The firm is also forecasting earnings of ($0.17) for FY13.

For an analyst ratings summary and ratings history on MEMC Electronic Materials click here. For more ratings news on MEMC Electronic Materials click here.

Shares of MEMC Electronic Materials closed at $4.20 yesterday.

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