Cowen’s Stone Weighs in on Evergreen Solar (Nasdaq:ESLR) Q3 Results

Nov 05, 2009
Author: SCP Editor

November 5, 2009 – Analyst Comments -  Cowen’s Robert Stone commented this morning on Evergreen Solar’s (Nasdaq:ESLR) Q3 results, noting that while the operating loss was smaller than expected, a wider loss at Sovello indicates that  it is in trouble. Stone maintains a NEUTRAL rating on the stock.

Financial Results

Evergreen Solar reported Q3 revenue of $77.7 million, compared with $63.8 million in Q2 and $22.1 million for the same period last year. Gross margins were 9.7%, 1.9% and 5.7%, respectively. Net loss for Q3 was $82.4 million, compared with $20.3 million in Q2 and $24.6 million last year. In terms of key highlights, Evergreen shipped 31.1MW from Devens in Q3, up from 23.2MW in Q2. It said it reduced its manufacturing cost to $2.24 per watt, down 17% from $2.70/watt in Q2. Wafer manufacturing costs were about $0.75/watt, down from $0.85/watt in Q2.

Stone’s Key Takeaways

·         The J.V.’s bank waiver expires at the end of November, and is at risk of further write-off. Evergreen is carrying Sovello at $50MM.

·         While cost/watt improved 17% sequentially to $2.40 and product GM rose to 7.1, it is above the ASP Stone estimates for Chinese competitors – cost/watt still not competitive

·         Maintains NEUTRAL rating on the stock