Amtech Soars; Solar Demand Strong

NEW YORK (TheStreet) -- The upcoming earnings reports from the solar sector are roundly expected to demonstrate the high demand level ahead of European solar feed-in tariff cuts, and an early indication of the level of solar demand came courtesy of Amtech Systems(ASYS) on Wednesday.

Amtech, which makes the solar furnace equipment to produce solar cells, preannounced fiscal third quarter revenue on Wednesday that blew by Street estimates. Amtech said that preliminary revenue for the quarter is at $42 million, with $37 million specifically from its solar business.

Analysts had expected $36 million in Amtech Systems revenue.

Amtech Systems total orders for the first three quarters of the year reached $135 million, higher than annual order levels for Amtech Systems in any previous year. Yingli Green Energy(YGE) was among the companies to announce an Amtech order in the past quarter.

Shares of Amtech rose by 8.5% on Wednesday, and the thinly traded stock -- it averages daily trading volume of 36,000 -- experienced trading of more than 337,000 shares by early Wednesday afternoon.

The record revenue of approximately $42 million represented a 161% increase over the preceding quarter, and 227% increase over the third quarter of fiscal 2009. Bookings of $44 million in the quarter were also at a record level.

Amtech shares gained 73 cents to a share price of $9.34 on Wednesday afternoon.

Amtech Systems sells the fusion furnaces that produce solar cells, and has a 35% market share, according to solar industry estimates. The company's revenue beat was no surprise, as Amtech has pre-announced higher solar orders for three consecutive quarters. Based on its 35% market share, analyst Gordon Johnson of Axiom Capital estimates that Amtech orders at the level of $135 million in 2010 support a solar cell capacity of 3.5GW. The 3.5GW in 2010 would represent more orders than Amtech had in the previous three years combined, including the solar boom year of 2007.

The story will be more complicated than furnace sales for the major solar module makers like First Solar(FSLR), Trina Solar(TSL), Suntech Power(STP), SunPower(SPWRA), and Yingli Green Energy.