Thursday, April 29, 2010

"MEMC Q1 Revs Beat Street View; But Reports Unexpected Loss" (WFR)

In late after-hours trade the stock is down 6.66% at $14.88.
From Tech Trader Daily:
MEMC Electronic Materials (WFR) this afternoon reported Q1 revenue of $437.7 million, up 23% from Q4, and 105% from a year ago. Excluding the company’s acquisition of SunEdison, revenue was up 7% sequentially and 76% from a year ago. The company posted a loss for the quarter of 4 cents a share; the Street had expected a profit of 4 cents....MORE
From Reuters:

MEMC Electronic Materials, Inc. Reaffirms FY 2010 EPS Guidance; May Exceed High End Of Prior FY 2010 Revenue Guidance

MEMC Electronic Materials, Inc. announced that after considering the first quarter results the Company still believes that its fiscal 2010 guidance for revenue, earnings per share (EPS) are appropriate, however, its current outlook does suggest that fiscal 2010 revenue may exceed the high end of the previously guided range. According to Reuters Estimates, analysts were expecting the Company to report EPS of $0.77 on revenues of $1.844 billion for fiscal 2010.
From Schaeffer's Research (Prior to the announcement):

MEMC Electronic Materials (WFR) is slated to release its quarterly earnings report after the close tonight, with analysts looking for a profit of 4 cents per share. During the same quarter last year, the company earned a penny per share. Historically, WFR has missed Wall Street's expectations twice, matched once, and beat once, resulting in an average downside surprise of 12.5%.

Options traders have favored calls heavily leading up to the event, according to data from the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE). Specifically, the stock's 10-day ISE/CBOE call/put volume ratio of 6.26 indicates that calls bought to open have outstripped puts purchased by more than six to one. However, this ratio rests in the 43rd percentile of its annual range, indicating that there is plenty of room on the bullish bandwagon.

But this swell in call buying may not be related to bullish option positions at all. During the past month, the number of WFR shares sold short spiked by 36.7%, resulting in nearly 11% of the stock's float being sold short. Given that short interest and call buying are rising in tandem, we could be witnessing bearish investors hedging their positions ahead of the company's quarterly report.

Technically, WFR appears to be in the process of rolling over after losing out to overhead resistance in the 17 region. The shares have pulled their 10-day and 20-day moving averages into a bearish cross, and are currently being squeezed into support at the 15 level.

WFR chart