MEMC Electronic Materials (NYSE: WFR) designs, manufactures and provides wafers and intermediate products for use in the semiconductor, solar and related industries.
Analysts see 2008 revenue increasing 20-30% after a likely solid 23-27% increase in 2007. Backorders also are impressive. Meanwhile, the sector's outlook provides additional cause for optimism, with solid demand for both solar wafers and semi wafers seen in the immediate years ahead.
Further, already healthy gross margins should increase, even though the solar segment is expected to add capacity. The Reuters F2007/F2008 EPS consensus estimates for WFR are $3.28/$4.19.
The risks? Negative changes to U.S. government policy regarding alternative energy could hurt WFR's results, as would a slowdown in the global economy. WFR also registered an impressive gain in 2007 and with a PE of 40, the stock is not cheap. Hence, WFR is a high-risk stock.
The First Call mean rating for WFR is: Buy [15 firms]. Mean 2008 target: $82.00 [high: $110, low: $61].
Stock Analysis: MEMC Electronic Materials is a high-risk stock not suitable for moderate-risk or low-risk investors. Investors with an investment horizon longer than two years should be rewarded from WFR's shares. Sell / Stop Loss: $53.
Disclosure: Lazzaro has no positions in stocks.
Nuclear power is on the comeback trail
Apple backs AT&T in continuing spat with Verizon
Closing Bell: The recession is still over, still... do you feel it?
