Thursday, August 30, 2012

STR Holdings Off; Hapoalim Downgrades To Hold, Cuts Target

STR Holdings (STRI) shares are down sharply this morning after Hapoalim Securities analyst Gordon Johnson cut his rating on the shares to Hold from Buy, with a new target of $19, down from $21.

The move follows the company’s announcement yesterday that it continues to expect 2010 sales of $310 million to $330 million, with non-GAAP EPS of $1.05 to $1.10 a share. STR noted that it is seeing strength in its solar business, but that it has seen reduced orders from clients of its quality assurance business; it expects revenue from the solar segment of $195 million to $205 million and QA sales of $115 million to $125 million.

For Q1, the company continues to expect sales of $77 million to $81 million and non-GAAP EPS of 23-25 cents.

Johnson said the only real incremental information in the update was the weakness in the QA biz; he writes that he had already expected update from its solar segment. He also notes that the lock-up period for a group of private equity investors who hold the stock expires on May 4, creating dilution risk for the shares; he notes that the lock up affects 28 million of the roughly 41.3 million outstanding shares.

STRI is down $1.43, or 6.7%, to $19.95.

Update: A spokesman for STR Holdings points out that the terms of the company’s lock-up basically prevent the sales of any shares covered by the arrangement for another six months after the lock-up expiration – and even at that point, only 50% of the covered shares would be eligible for sale, with the remaining shares subject to sale another 91 days later.

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