Friday, February 4, 2011

UPDATED: "Power-One Is Dead Money: Analysts" (PWER)

Update: "Buy Power-One for Hedge Fund type Returns: Analyst Roundup (PWER)"
Original post:
The stock is down $2.46 at $9.29 slightly above the day's low of $8.97.
Look for another test of that low as the slow-to-move crowd become resigned to the decline.
Then we swoop.
From TheStreet:
Solar inverter company Power-One(PWER_) is down 22% on Friday, and even analysts who remain bullish on the long-term for the high-flying -- and highly shorted -- solar company, say the stock is "dead in the water" and a "dead money" stock for at least a quarter.

The case can be made that Power-One shares are inexpensive -- after the 22% dip Power-One shares only trade at 8 times earnings -- yet the case can also be made that Power-One has officially joined the rest of the volatile solar sector in compressed multiple-land. Most of the Chinese solar stocks trade between 4x and 8x earnings.

The critical issue for Power-One is how fast it can work through the inventory glut that it said has caused a revenue shortfall for the first quarter, and how well pricing will hold up as long as an excess supply of inverters exists in the market.

Power-One said the two things in its 2011 outlook that are more or less the recipe for a selloff in volatile solar. The solar inverter company said that feed-in tariff declines and excess inventory are going to cause a less-than-expected revenue performance from the company, and even though Power-One wouldn't say specifically, solar margins will be down....MORE