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American Superconductor Under Pressure

NEW YORK ( TheStreet) -- Wind power market player American Superconductor (AMSC - Get Report), has been a favorite target of bearishness based on its reliance on sales to a Chinese wind power giant, and the latest salvo came from Barron's, which published a negative piece over the weekend on AMSC's relationship with Chinese wind power bellwether Sinovel.

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American Superconductor was featured as one of the primary clean energy stocks on which investors had turned bearish in a Bloomberg article published last week. Barron's piled on over the weekend, making the case that American Superconductor's reliance on Sinovel for sales is reason to short the company.

It's not a new thesis. Last March, Citron Research made the same case, though it did not extend its argument in the same direction as Barron's, which now is making the claim that the Chinese wind power giant's own numbers indicate weakness in its core market.

The data that Barron's points to are Sinovel inventories, which are piling up at a rate that is faster than its shipments, setting up a situation in which American Superconductor sales are going to slow down.

Barron's also makes the case the Sinovel has begun buying from additional suppliers of electrical components of the type which American Superconductor makes.

American Superconductor shares were down 7% on twice its daily level of trading volume on Monday in the early afternoon.

American Superconductor bulls on the Street were quick to counter the Barron's analysis.

Theodore O'Neill of Wunderlich Securities and Jesse Pichel of Jefferies both cited reasons why they believe the Barron's report was flawed.

For one, the American Superconductor bulls state that there is no sign of any threat to American Superconductor's sales relationship with Sinovel being tested by other electrical component suppliers. American Superconductor continues to supply the core component to Sinovel for its wind turbines, according to the Street analysts. Barron's didn't specify a second supplier. Jefferies says the only other supplier is Sinovel's parent company, which provides electrical systems integration.
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