MEMC Electronic Materials (WFR): Target Slashed, Long Into Earnings

Credit Suisse is “trimming” its target price on the silicon wafer manufacturer MEMC Electronic Materials (WFR) from $80 to $65 (we call that “slashing”). Three concerns that are plaguing the solar-related stock prompted the cut:

  • Oversupply of polysilicon risk, exacerbated by Spanish solar subsidy cut concerns
  • Metallurgical silicon (a lower purity alternative to solar grade silicon) risk
  • Execution risk in poly plants

Of course, just because Credit Suisse cut its target and maintains NEUTRAL doesn’t mean they don’t like the stock into earnings. Great way to have it both ways:

But the stock appears oversold at these levels, we’d own WFR for a trade into earnings. Trimming PT to $65 (10x potential peak earnings of $6, adjusted for cash), new PT is fairly conservative and prices MEMC as a true cyclical with trough multiple off of peak earnings

Credit Suisse maintains NEUTRAL on MEMC Electronic Materials (WFR), target price cut from $80 to $65.

See Also:
MEMC Electronic Materials (WFR): Production Problems Minimal
MEMC Electronic Materials (WFR) Gets Boost From Stong Polysilicon Prices


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