Zoltek: Deutsche Launches Coverage With Hold Rating

Deutsche Bank analyst Carter Shoop this morning launched coverage of carbon fiber manufacturer Zoltek (ZOLT) with a Hold rating and an $8 price target, which is below yesterday’s close at $9.91.

Shoop writes that Zoltek, which is a supplier to the wind power market, will benefit from increasing adoption of carbon fiber in the next few years. But he also contends that “near-term trends may prove more difficult than currently discounted by investors.”

Zoltek, Shoop notes, is the leader in the carbon fiber market - and contends that cost and performance advantages will help the company drive “healthy” longer term growth. But he also worries that results will be weak for the next few quarters, due in part to an “inventory and supply correction in the carbon fiber market.” He also thinks Vestas, a wind turbine company which accounted for 59% of sales in the latest quarter, may be seeking a second source for carbon fiber.

ZOLT today is down 19 cents, or 1.9%, to $9.62.