AmTech Cuts Price Target on Yingli (YGE) to $27

August 7, 2008 11:42 AM EDT
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American Technology Research lower its price target on Yingli Green Energy (NYSE: YGE) from $36 to $27 while maintaining a Buy rating.

The firm calls Yingli's Q2 earnings results "strong", but believes there are reasons to be concerned with the company's "cash balance and reliance on short-term debt to fund capacity expansion." AmTech feels Yingli currently has enough cash and credit available to finance its already planned expansions, but in order to continue expanding beyond Q209, the firm believes Yingli will need to announce more financing.

"Given its low processing costs, vertical integration, and brand reputation..." the firm said it remains positive on Yingli, but no longer sees the stock's multiple could expand to 20x due to near-term financing issues and uncertainty related to the company's average selling price. Therefore, AmTech says its lower price target is the result of a reduced target forward multiple to 15x. The firm notes that shares of Yingli currently trade at less than 9x AmTech's FY09 EPS estimate but is projected to grow EPS in excess of 60%.

Yingli Green Energy Holding Company Limited and its subsidiaries engage in the design, development, marketing, manufacturing, installation, and sale of photovoltaic (PV) products.

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