Evergreen Solar Inc, ESLR: Evergreen Solar News, Investing in Evergreen Solar

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With oil prices remaining at elevated levels, alternative energy companies could receive added support from government policies, regulatory bodies as well as investors.

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With oil prices remaining at elevated levels, alternative energy companies could receive added support from government policies, regulatory bodies as well as investors.

Experts have been bullish on the medium- to long-term prospects of the alternative energy sector. One company that has been making its presence felt in this arena is Evergreen Solar Inc (ESLR), which develops, manufactures and markets solar power products mainly in the US and Europe.

The company’s product sales in the second quarter of 2008 stood at $18.1 million, up from $13.4 million in the same quarter in the previous year. Royalties received for licensing its String Ribbon technology and fees related to providing marketing and sales support for EverQ totaled $4.6 million, as compared to $2.0 million in the second quarter of 2007. While these results were encouraging, the bottom line was not. Net loss surged to $8.9 million, or $0.08 per share, from $25,000 in the prior quarter and $7.5 million, or $0.09 per share, in the second quarter of 2007. Evergreen Solar indicated that the significant quarter-over-quarter increase in its net loss was mainly on account of costs related to the Devens facility start-up and Marlboro site ramp down. Despite the growing revenues, investors were unhappy with the company’s mounting losses and sent shares south. However, the manufacturer of String Ribbon(TM) solar power products is in the initial stages of growth and significant investments are not uncommon in this phase.

The company has commenced wafer production in Devens 1 as well as construction of Devens 2. The Devens facility (in Massachusetts) is expected to have an annual capacity of about 160 MW by mid-2009. Chairman and CEO Richard M. Feldt has expressed his optimism regarding the company being able to achieve gross margins of “at least 30% in early 2009.” Moreover, Evergreen Solar has inked contracts through 2013 valued at about $3 billion, including a long-term sales contract with Germany’s IBC SOLAR AG.

In mid-July, Wedbush Morgan upgraded its rating for Evergreen Solar from hold to buy. Meanwhile Caris & Company initiated coverage of the company with an above-average rating.

 

Alternative energy companies are likely to be in focus, with consumers and governments looking towards energy sources that reduce the dependence on oil. Evergreen Solar’s prospects for next year are bright, with the ramp up of capacity at the Devens facility and the recently announced contractual backlogs. The company’s shares have been volatile this year. Nonetheless, trading significantly short of its 52-week high of $18.85 (on December 26, 2007), Evergreen Solar’s stock may be an interesting option for long-term investors.

 

Alternatio Cirqui, EconomyWatch.com Energy