LDK Solar (LDK) has a big fan in Needham. Despite gross margin pressure, the firm continues to rate LDK a Strong Buy with a lofty target of $95.
First, Needham is pleased that LDK’s two polysilicon plants under construction appear to be on track, as the company’s chairman recently reaffirmed (Solarbuzz):
“Our plant construction and equipment installation remains on schedule.…We are on track and confident in our ability to produce 100 to 350 MT of polysilicon in 2008,” said [LDK Chairman] Peng.
“LDK Solar remains confident in its 15,000 MT polysilicon plant construction progress, and the first phase of plant construction and equipment installation for up to 6,000 MT capacity is expected to be complete by the end of 2008,” Chairman Peng concluded.
Second, although LDK management expects Q2 gross margins to be low, Needham expects revenues to be at the high end of the guidance range.
Not clear how weak gross margins and modest revenue upside is going to get us from $32 to $95, but in any event: Needham reiterates STRONG BUY on LDK Solar (LDK), target $95.