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Energy Conversion Devices (ENER) Message Board

  • big_bones_Magoo big_bones_Magoo Jun 14, 2007 2:02 PM Flag

    It is not Goldman or JP Morgan

    but I will take it for now...

    ENER Upgraded to a Buy Rating
    Thursday June 14, 1:57 pm ET
    By Zacks Equity Research


    With the alternative energy industry increasingly attractive, especially over the longer-term, Zacks senior alternative energy analyst Jon Kolb has upgraded his rating of Energy Conversion Devices (NasdaqGS: ENER - News) from Hold to Buy. Here are some of the reasons behind this:
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    We remain optimistic about the company\'s long-term potential success in the high-growth alternative energy industry, given increased activity in solar power projects, and progress toward sustainable profitability in 2008. Nevertheless, we note the stocks high volatility, slow production ramp-up, and higher production costs at Auburn Hills 2. Additionally, despite increasing product revenue and several recently announced contracts, we question the profitability potential of licensing royalties.

    A history of negative profit margins, operating income and negative historical earnings, including projected EPS [earnings per share] losses in 2007, without meaningful valuation metrics, collectively show potential for moderate-to-high returns yet with high risk. Accordingly, we upgrade ENER common stock to a speculative Buy recommendation with a six-month target price of $35, representing annualized total return potential of 35.2%.

    High and volatile global energy prices, in combination with declining technology costs, have renewed interest in alternative energy stocks, thereby pushing many valuations higher in volatile markets. Solar module sales have grown approximately 45% per year over the last five years as costs have dropped and hybrid vehicles have introduced a growing presence in the American culture.

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    • My interlaced comments are in [[]]s.

      <<<With the alternative energy industry increasingly attractive, especially over the longer-term, Zacks senior alternative energy analyst Jon Kolb has upgraded his rating of Energy Conversion Devices (NasdaqGS: ENER - News) from Hold to Buy. Here are some of the reasons behind this:

      We remain optimistic about the company\'s long-term potential success in the high-growth alternative energy industry, given increased activity in solar power projects, and progress toward sustainable profitability in 2008. Nevertheless, we note the stocks high volatility [[indeed]], slow production ramp-up [[What is slow about 100% per year capacity growth, on average? If the less-than-expected Sales for Q2 and Q3 were a trend, he would have some justification. But, guidance from UniSolar indicates special one-time issues that will not keep AH 2 from full production by the Fall.]], and higher production costs at Auburn Hills 2. [[BS. AH 2 production costs are lower than for AH 1, at any given level.]] Additionally, despite increasing product revenue and several recently announced contracts, we question the profitability potential of licensing royalties. [[!!?? Incredible. Ovonyx has stellar potential and ECD gets significant royalties from the other techs directly.]]>>> (Zacks Equity Research)

      And, his coverage of the hybrid situation is disgraceful. Unfortunately, he is all too typical of even the honest stock �analysts�.

      • 2 Replies to Ray_Bowman
      • I too am in the show me camp for results, which is why the forecast has a "yeah, yeah" quality to it.

        But I agree that if the management was suspect in its rampup, that is what should be talked to, not obfuscating the products, but the producers/management.

      • Ray,

        << slow production ramp-up [[What is slow about 100% per year capacity growth, on average? >> Ray

        They can change their mind about this and raise guidance if Uni-Solar accomplishes a faster ramp. But I think the analyst may have been suggesting he is not convinced they will ramp per the plan mgmt layed out. Perhaps overly cautious but not without reason.

        << If the less-than-expected Sales for Q2 and Q3 were a trend, he would have some justification. But, guidance from UniSolar indicates special one-time issues that will not keep AH 2 from full production by the Fall. >> Ray

        Again, mgmt's credibility is low. Problems with AH2 and I still haven't seen a clear statement that indicates whether that plant will "ready to produce" at full capacity by fall or "actually producing" at full capacity by fall. The credibility problem is also related to the long and as yet unsuccesful searches for Cobasys and OHS partners and the failure to achieve sustained profitability by FY08.

        << Additionally, despite increasing product revenue and several recently announced contracts, we question the profitability potential of licensing royalties. [[!!?? Incredible. Ovonyx has stellar potential and ECD gets significant royalties from the other techs directly. >> Ray

        Perhaps he was referring to battery royalties. Ovonyx royalties are not significant yet. PRAM products from the major licensees are not yet on the market. Again, perhaps overly cautious but the analysts probably don't have much information to go on re: PRAM sales since they haven't really started and all the parties involved are pretty tight-lipped.

        << And, his coverage of the hybrid situation is disgraceful. >> Ray

        All the analysts are Missourians when it comes to ECD - SHOW ME! ECD got a buy recommendation from an analyst who may have erred on the conservative side... and you want to chew him out. Unbelievable!

        Snoz

    • Probably the first of many valuation based upgrades. In essesnce they are saying management not so good but the stock doesnt deserve to be here either.

 
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