Analysts See Chipmaker Solar Strife

4/11 - "Credit Suisse analyst Satya Kumar downgraded Applied Materials shares to "Neutral" from "Outperform" on Monday, saying its stock is "trading purely on solar" without factoring in several risks...Goldman Sachs analyst James Covello also said investors are "ascribing too high a multiple to Applied's solar business" in a March 27 note.

Applied's thin-film products have not yet been tested in commercial production. However, the market is valuing its earnings potential at the same level as one of the leading thin-film companies, First Solar Inc., according to Covello. He also said investors have underestimated the risk that Applied's chip orders will fall short due to high capacity and weaker margins."

"MEMC is another company that may face a cloudier solar horizon than Wall Street expected. The St. Peters, Mo.-based silicon producer has focused on selling its wares to solar-power companies in recent years. However, according to Deutsche Bank analyst Steve O'Rourke, MEMC is having "growing pains" due to "execution missteps" in its solar business.

MEMC put too much emphasis on steadying its revenue stream via silicon wafer contracts, O'Rourke said, thereby limiting its ability to take advantage of surging spot prices."