Merrill Lynch is positive on MEMC (NASDAQ:WFR) ahead of results saying the co has the potential to again post upside record results in 4Q and provide a stable 1Q outlook driven by rising pricing, flat to slightly down volume and cost reduction programs enabling solid margins. MEMC has an increasing mix of 300mm and high memory exposure, lower exposure to foundry, improving high end mix of wafers, sales to solar customers, including the start up of MEMC's 10 year contract with Suntech in 1Q07. Firm believes favorable IC and solar volume growth forecasts for 2007 should drive above industry growth and margins for MEMC as the pure play wafer and polysilicon supplier to both markets.
While firm's estimates have been based on conservative 2-3% wafer volume declines for 4Q06/1Q07, these have been partially offset by the improving pricing and margin mix of MEMC's business and growing sales to the solar market. Thus, they believe the stock should be bought ahead of a solid 4Q result and 1Q outlook.
Reits Buy and $50 tgt.
Notablecalls: Not a major call. I would not have highlighted it if there had not been some market participants trying to push the stock down by spreading the word that WFR would have to lower guidance due to weakness in its non-solar ops. That happened couple of days ago. The stock managed to shake it off and move higher. That tells me there are some serious buyers out there. Would not be surprised to see the stock move higher in the s-t.
While firm's estimates have been based on conservative 2-3% wafer volume declines for 4Q06/1Q07, these have been partially offset by the improving pricing and margin mix of MEMC's business and growing sales to the solar market. Thus, they believe the stock should be bought ahead of a solid 4Q result and 1Q outlook.
Reits Buy and $50 tgt.
Notablecalls: Not a major call. I would not have highlighted it if there had not been some market participants trying to push the stock down by spreading the word that WFR would have to lower guidance due to weakness in its non-solar ops. That happened couple of days ago. The stock managed to shake it off and move higher. That tells me there are some serious buyers out there. Would not be surprised to see the stock move higher in the s-t.
No comments:
Post a Comment