SunEdison Drags MEMC Earnings Down

The Street reaction to the MEMC miss was not surprisingly negative overall. Jefferies see wrote in a note on Friday morning that even with incremental improvements in the second half from systems sales, semiconductor and solar margin declines in 2011 and the uncertainties of selling solar projects merit a hold rating and price target of $10. "We believe 2010 is peak earnings/margin for MEMC given our outlook for substantially lower solar wafer prices and potentially lower semi wafer prices/volume in 2011," Jefferies analyst Jesse Pichel wrote.

Oppenheimer & Co. lowered its earnings guidance for the year to 46 cents, noting that MEMC's solar materials unit is seeing de-minimus margin improvement in a favorable pricing environment and took its price target down from $16 to $13.

Needham & Co. took its MEMC full year earnings call down to 33 cents, but kep the stock at a hold, writing, "Semi wafer saw a healthy rebound, but in its solar wafer business, higher prices were again limited by high tolling costs. Additionally, lower SunEdison sales in 2Q10 suggest some delays in project completion, which probably disappointed the Street. While the lowered 2010 earnings guidance should temper expectations, we'd wait for improvements on solar wafer cost and better visibility of SunEdison's project timing before revising our rating."

-- Written by Eric Rosenbaum from New York.

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