Suntech Power Holdings' (NYSE: STP) stock has 'totally misbehaved,' from a technical standpoint, since first recommended on July 28, 2009 at a price of $19.24. Hence, I'm putting a Hold on the shares. Back in July, the calculation was that Suntech would benefit from China's solar subsidy program, as well as from U.S. government initiatives to invest in renewable energy. Further, reduced selling prices moving forward were expected to increase demand for Suntech's products. The First Call FY2009/FY2010 EPS estimates for STP are 21 cents to 57 cents.
However, the shares plummeted after the company reported Q3 EPS of 6 cents - above the consensus estimate, but apparently not a large enough 'earnings beat' to keep short-term investors in their positions. Some selling was expected – the stock had vaulted from $5 to about $21 in five months - but the selling has not ceased this fall and the stock's chart technically is now approximating a bear-hug – a bearish pattern – hence the Hold rating.
If STP can hold support in the $13-range, a Buy rating may be re-issued. For now, it's stand aside.
Stock Analysis: Suntech Power Holdings ADS is a high-risk stock. If you've already purchased the company's shares, Hold them. If not, Don't Buy STP at this time. Sell/Stop Loss if you bought shares in this company: $8.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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