In an industry note, Shah wrote that last week he attended Suntech’s analyst day and also met with several solar and polysilicon companies in China. His takeaways from the trip:
- Demand trends are tracking “well ahead” of Street expectations.
- Polysilicon prices have increased sequentially in Q4 and could increase “substantially” in the 2008 first half.
- As poly prices rise, some solar companies are looking to vertically integrate to maintain margins.
For MEMC, Lehman’s new target price is $110, up from $90. For JA Solar, they go to $80 from $65. And for Suntech, the new target is $100, up from $80.
Lehman’s key points for the three companies:
- MEMC: Polysilicon tightness should continue into 2009. Poly prices could rise another 20% in the second half, giving a boost to the company’s revs and EPS.
- Suntech: They see upside to estimates, and possible multiple expansion.
- JA Solar: Lehman sees the potential for more upside, “as management continues to execute on new wafer supply contracts and delivers strong 4Q earnings/2008 guidance.” They see the stock as a “name to own” headed into Q4 results.
MEMC Tuesday is up $2.41, or 2.9%, at $85.83. Suntech is up 7 cents at $78.50. JA Solar is up $2.87, or 4.2%, at $70.94.