Tuesday, February 19, 2008

Suntech (NYSE:STP): Beat & Raise?

- Cowen is out positive on Suntech (NYSE:STP) saying they believe the co is poised for a beat-and-raise quarter. Guidance for 2008 shipments ought to be revised up. STP is targeting YE capacity of 1GW, so H2 upside looks do-able with likely incremental silicon supply. STP has an aggressive/diversified silicon procurement strategy. High spot prices seem offsettable by rising conversion efficiency and scale. New Pluto technology and product diversification should expand the P/E. Sees 50%+ upside vs. the market in 12 months and reiterates Outperform rating.

Thinks management may raise 2008 guidance.

They believe STP shares do not yet command full value for its technology and product diversification efforts. As Pluto lines ramp, higher conversion efficiency should aid GM. And, other new products like thin-film for BIPV and Andalay modules further differentiate it from competitors.

Notablecalls: Note that Lehman is out on STP this AM cutting their tgt to $75 from $100 while keeping their Overweight rating.

The Cowen call strucks me as somewhat surprising as I happen to know that Suntech's management sounded a bit cautious couple of weeks ago when they spoke to a group of investors. Of course, no guidance was provided (reg fd). Yet, now we have Cowen out saying they feel STP is going to have a beat & raise qtr when they report tomorrow morning.

The cautious tone has attracted some short-sellers over the past weeks, so I would not be surprised to see some short covering on heels of Cowen's "beat & raise" call. Think the short community has too painful memories from the FSLR short last week.

Anyway, not making a call here but one to watch.

1 comment:

GuybrushT said...

That Cowen analyst must be eating crow after earnings. Wiping the egg off his face even.