Piper Jaffray is downgrading GT Solar (SOLR) to Underweight and slashing the price target to $3 following the earnings report.

Hat tip to StreetInsider.com for the following comment:

“While we believe SOLR’s DSS furnace business is well positioned for a coming expansion cycle and possibly a replacement cycle as the company launches its 600KG furnace next year, we have major concerns on SOLR’s polysilicon equipment (CVD) backlog that bring us to downgrade the stock…We believe that the company’s backlog for polysilicon reactor equipment (75% of its backlog) is at risk due to a rapidly deteriorating financial condition at its polysilicon equipment customers in China with little hope of an expansion cycle near term as the Chinese government clamps down on new poly entrants in an effort to rationalize capacity. We speculate that many poly start-ups in China could shut down and it will be difficult for SOLR to get new bookings or realize its contracted backlog…We downgrade SOLR to UW on poly backlog risk and lower PT to $3 (12x FY11 EPS of $0.26) from $7 (12x FY11 EPS of $0.56). We believe a multiple of 12x is justified owing to poly backlog risk and mgmt uncertainty partially offset by GT Solar’s technology leadership and strong balance sheet.”