Two tier-1 firms are out positive on MEMC Electronics (WFR) this morning:
- Citigroup notes that following through on their cautious call into the Q, they think this is finally the peak of the bad news with the stock, at ~$40 aftermarket, now possessing a unique combination of attributes: inexpensive, and finally set up to beat and raise headed into late '08/early '09.
While peers have tried to make this call for several Qs, they think three key things have changed that finally make this stock work going forward: 1) silane (an inherently difficult process to ramp and one in which very few companies around the world have deep expertise) is no longer the capacity bottleneck, 2) capacity to significantly beat is in the ground, and 3) valuation leaves significant margin for error. Even assuming $50/kg for all solar product, they estimate downside to ~$35 against upside to a $65 target (sum of parts). C'09 largely unchanged, C'10 from $5.63 to $6.14. Upgrades Hold to Buy and adds to Citi's Top Picks Live [TPL].
- JP Morgan upgraded WFR to Overweight from Neutral this morning.
Notablecalls: I suspect the stock will trade just below the $50 level today. There is some offered in pre-market - I suggest you take it for a bounce.