Evergreen Solar: Piper Downgrades, Cuts Target

Piper Jaffray analyst Jesse Pichel this morning cut his rating on Evergreen Solar (ESLR) to Neutral from Buy, chopping his target price in half to $2.50, from $5. The move follows the company’s release after the close yesterday of disappointing Q4 results.

Pichel offered three reasons for his more cautious approach to the stock:

• He contends the company is “rapidly losing its polysilicon cost advantage” as the price of polysilicon approaches $100/kg and as “competition intensifies in an over-supplied environment.”
• Pichel says he has “little visibility” into the company’s new strategy to outsource production in Asia.
• The company’s balance sheet “leaves little flexibility for pursuing alternative expansion strategies in Asia.”

He says the stock at $2 “represents an option on solar’s growth in the U.S.,” but that “future growth and profitability prospects have become murkier in the last two months in an intensely competitive environment.”

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