From Standard & Poor's Equity ResearchMERRILL DOWNGRADES EVERGREEN SOLAR, SUNPOWER TO SELL FROM NEUTRAL
Merrill Lynch analyst Mark Heller says while he has been cautious on the solar space for some time due to oversupply concerns, he is now taking a formal decision to downgrade Evergreen Solar (ESLR) and SunPower (SPWR), to sell from neutral. He maintains a buy on First Solar (FSLR), but cuts his price objective to 325.
Heller says it appears that an increasing number of politicians are advocating a bigger cut to German solar subsidy due to escalating cost. He notes Germany is about 50% of the market, so this is an important decision for the group and the risk to him looks on the downside.
He notes his European colleague is also downgrading three European solar stocks to sell this morning: AM-Q-Cells, Solarworld, and REC.
CITIGROUP DOWNGRADES CHICO'S FAS TO SELL FROM HOLD
Yesterday, Chico's FAS (CHS) posted $0.07, vs. $0.27 a year ago, first quarter EPS. Citigroup analyst Kimberly Greenberger says while she applauds management's new focus on leaner inventory and cost controls, the stock has run well above her 7 price target, leaving it vulnerable in the absence of near-term fundamental improvement (notes she estimates second quarter same-store sales to fall 13%).
Additionally, Greenberger thinks there is significant downside risk to consensus second half estimates as she expects negative comps to continue in the second half of the year.
She lowers her fiscal year 2009 EPS estimate to $0.17 from $0.19 and fiscal year 2010 forecast to $0.43 from $0.47.
STIFEL NICOLAUS UPGRADES EXPEDIA TO BUY FROM HOLD
Yesterday, Expedia (EXPE) chairman Barry Diller reportedly dismissed reports he is taking the company private. Stifel Nicolaus analyst George Askew says he doesn't think speculation of a management-led buyout is credible. He says a management or private-equity buyout would need considerable debt financing, which he doesn't believe current debt markets would support.
However, Askew thinks the company's advertising model is successful and says advertising and media segment EBITDA margin are double the core business'. He notes first quarter intertnational gross bookings rose 25% ex-forex and says the company is aggressively pursuing new hotel relationships in Europe.
He also believes the domestic economy is moving into a peroid of stabilization and sees the second quarter as the likely low point for growth. He thinks Expedia shares are cheap, and sets a 30 price target.