MEMC Electronic Materials (WFR) Reports Strong Revenues, But Surprising Loss; Reaffirms Guidance; Shares Down 7%

MEMC Electronic Materials (WFR) is surprising traders after the bell today, but not in the way many expected.  With the technical action improving in WFR in recent weeks, they were expected to post a quarterly profit and begin the road to lasting profits.  That path remains on hold for now.  While the company reported revenues much higher than what analysts expected at $438 million (more than double the year ago quarter), they missed badly on the EPS side, posting a loss of .04/share.  Analysts were expecting a profit of .04/share, so a big disappointment there.  Traders are reacting after hours, sending the stock down about 7%.

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As CEO’s do best, Ahmad Chatila remains positive: “Improving end markets, successful efforts to recapture customer share, and the addition of SunEdison to our portfolio have together driven significant sales growth for the fourth sequential quarter since the severe cyclical downturn.  The efforts and investments undertaken to rebuild and reposition our company are beginning to deliver results and we believe will become more evident as the year progresses.”

Despite the miss this quarter, the company reaffirmed its full year revenue and EPS guidance and believes they may even hit the high end of their previously guided range. 

It will be interesting to see if the stock can find support around that $15 range.  Analysts were expecting a profit last quarter and WFR missed by posting a loss.  The trading action was ugly the next day with the stock gapping down nearly 20% on heavy volume.  If that happens again tomorrow and the 50 and 200 day moving averages are taken out, WFR once again becomes technically questionable with a retest of the lows a possibility.  I think it will hold support above $14.50 based on the fact the company is reaffirming guidance, but we’ll see how it plays out tomorrow.  I’m still looking for a long term entry point on WFR.

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