Zeit für MEMC - Ziel 6 USD

Analysts generally think investors should stand pat on MEMC Electronic, with 10 of 17 analysts rating it hold. Analysts have become more optimistic about the stock recently and the number of buy ratings has risen slightly over the past three months.

Competitors:

MEMC Electronic manufactures silicon wafers that serve as the base material for the production of semiconductor devices. It also has a segment that develops and sells photovoltaic energy solutions, including the installation and maintenance of solar energy systems and the sale of solar-generated electricity. One of MEMC Electronic’s main competitors in the semiconductors and semiconductor equipment industry is Micron Technology (MU). Other competitors in the information technology sector include: AXT (AXTI), Spansion (CODE), and Cymer (CYMI).

Recent Price Movement:

The stock price has fallen 34% to $3.48 from $5.27 since February 6, 2012. The price is within 17 cents of its 52-week low ($3.31), which was set on April 10, 2012.

Semiconductor maker MEMC Electronic Materials(WFR) rounds out the last technology short squeeze candidate stock. MEMC reports after the close on Wednesday. Wall Street is expecting about -0.15 cents, with many experts predicting -0.18 cents or -0.19 cents.

■Analysts are expecting MEMC to move from losing money to making money. The forward price-to-earnings ratio is only 5.7, but don't give this ratio too much weight before it stabilizes.

■Almost 13% of the float is short for a record number of shares shorted at 26.3 million.

■Even with more than 7 million shares a day traded, the short interest amounts to 3.7 days of volume.

Finding stocks that may move higher due to a short squeeze can be financially rewarding and also satisfying -- you know you outsmarted the "smart money." When you do find one, it's OK to brag a little about it. Don't worry, I won't tell anyone.

MEMC believes that the cyclical downturn hurting the semiconductor industry will likely bottom out by the next quarter. Though first quarter revenues could be 10.0–15.0% lower sequentially, order growth could ramp by the second quarter of 2012. Moreover, the company believes that revenue in second half 2012 could be stronger than in the first half.

For our detailed blog on the fourth quarter, please see this link: MEMC Incurs Loss on Low Chip Demand

Agreement of Analysts

The analysts are concerned about declining solar wafer pricing due to a supply glut. The analysts believe that it would not be possible for MEMC to offset the price declines with the ongoing cost reduction program.

We believe these issues are ongoing and the situation is unlikely to change in the near term. We also do not see any other catalysts that could affect earnings at this point, which is most likely the reason that the last 30 days saw minimal estimate revisions for both the first quarter and fiscal 2012.

Magnitude of Estimate Revisions

Given the limited revisions, the Zacks Consensus Estimates for the first quarter and fiscal 2012 remained unchanged in the past 30 days at a loss per share of 15 cents and earnings per share of 15 cents, respectively. But the estimates for the first quarter and fiscal 2012 fell 9 cents and 18 cents, respectively, in the past 90 days.

Recommendation

We believe that MEMC’s first quarter results will be impacted by continued solar price declines. Though the company is trying to fight lower ASPs and higher costs through a major restructuring effort, we doubt that any positive impact from the initiative will be seen from results until later in 2012. In the meantime, stable pricing in the semiconductor vertical could provide some support.

We see MEMC’s solar energy initiatives as a key driver for the long term. The company has tie-ups with key players such as Flextronics International Ltd. (FLEX) and Jusung Engineering Co. Ltd. to make its solar ventures efficient and profitable. The company is also seeing solar demand cropping up in India.

But the oversupply situation in the solar market is a concern. Moreover, MEMC’s long-term solar wafer supply agreement with Suntech Power Holding Co. Ltd. (STP) also came to an end. The persistent fall in polysilicon prices led to lower pricing for solar channels. As the long-term pact was on a higher price, the receiving party decided to cease the agreement. On the other hand, more polysilicon production could negatively affect the oversupply situation in solar chip demand.

Currently, MEMC has a Zacks #3 Rank, implying a short-term Hold recommendation.