Collins Stewart Upgrades Suntech Power (STP) From Sell To Hold
Collins Stewart likes the Suntech Power (STP) earnings report as much as I did and is upgrading the stock from Sell to Hold and has a $14 price target on it. Hat tip to Street Insider for the following analyst comment:
The full details of STP’s blow out 4Q09 can be seen in the attached table, but the highlights are that revenues were 13% above our forecast and an EPS of $0.27 triple our $0.09 forecast. The upside was driven by the strong market conditions in 4Q09 and STP having the spare capacity to take advantage of it. STP shipped 263MW in the quarter, up 32% sequentially and above guidance. Strong execution enabled STP ship 30-40MW more than it had committed to customers in 4Q09. Given the sold out conditions in 4Q09, STP received a premium on the uncommitted modules and had better costs on the extra due to lower wafer prices. Gross margins was 23.8%, 710 bps above our forecast.
Our CY10 and CY11 EPS forecast are raised to reflect greater volume and a revision to 2Q10 due to the German feed in tariff reduction now being expected in July. CY09 EPS is raised to $0.95 from $0.61, with 54% of the EPS occurring in 1H10. Our CY11 forecast is raised $0.25 to $0.95, just flat with CY10, as CY11 will not benefit from demand strength ahead of a large FIT reduction.
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