SAINT PETERS, MO. ( TheStreet) -- MEMC Electronic Materials ( WFR), the U.S. semiconductor and solar materials company that has been trending up throughout March trading, hit a share price at the close on Tuesday of $15.51, MEMC's highest closing price since October 2009.

MEMC has the biggest gain in the S&P 500, climbing 5.7% to the $15.51 close on Tuesday. Call-option trading increased on rumors that MEMC would be acquired, a rumor repeated by Bloomberg in its Tuesday market report. Shares volume for MEMC was twice its average volume.

On Wednesday morning, Wunderlich Securities analyst Theodore Kaufman was out with a note saying the latest acquisition rumors swirling around MEMC Electronic Materials are not well-grounded.

While the solar sector rallied significantly on Friday and Monday on more bullish 2010 demand calls from the Street, MEMC is the only of the solar stocks to have steadily increased in price throughout the previous month, rising from a share price of below $13 at the outset of March.

MEMC shares were down slightly in early morning trading on Wednesday, just after the opening bell.

Wunderlich has a hold rating and a $15 target price on MEMC.

The Wunderlich analyst wrote that this type of trading activity in MEMC shares has sparked speculation of a takeover on Jan. 6, 2010; Nov. 3, 2009; Sept. 16, 2009; and Mar. 30, 2009.

Wunderlich's O'Neill finds it difficult to see the value in an MEMC takeover as long as margins are falling and product is in worldwide oversupply, which is the analyst's current view of the semiconductor and solar market. "These segments are under pricing pressure from too much competition and lack of commercial credit, or, in the case of the legacy semiconductor industry, are growing at an increasingly slow rate," the Wunderlich analyst wrote.

The analyst pointed to the large-scale solar business which MEMC entered this year through its acquisition of SunEdison as a revenue booster. However, it's a lower gross margin business, the Wunderlich analyst noted, and it is already a crowded market, led by First Solar ( FSLR). MEMC recently announced that it plans to build the largest solar plant in Europe.

Wunderlich continues to take the view that an improvement in the semiconductor sector in the fourth quarter and first quarter of 2010 does not have the legs to last the full year 2010.

"According to our bottoms-up analysis, the world is oversupplied with semiconductor and solar raw material by a factor of nearly 200% this year. The silicon makers of the world all added capacity at the same time; thus, what was a small oversupply in 2008 of 27% spiked to 125% in 2009.... We believe it would take another Y2K-sized event to alter the picture," O'Neill wrote in his note, downplaying the likelihood of an MEMC takeover.

-- Reported by Eric Rosenbaum in New York.

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