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LDK Solar (NYSE: LDK ) has been riding a middle-of-the-road three-star rating for more than six months, but enough top-performing CAPS members have turned bullish on it recently to upgrade it to a more formidable four stars. A total of 1,401 members have given their opinion on the solar module maker, with many of them offering analysis and commentary explaining the recent optimism.
Despite weaker selling prices because of the drop in polysilicon prices, LDK Solar echoed peers Suntech Power (NYSE: STP ) and Trina Solar (NYSE: TSL ) with higher-than-expected earnings in its recent quarterly report, breaking its string of losses. Demand has improved significantly lately, so the company forecast better-than-expected sales and shipments for the fourth quarter. Its third-quarter revenue rose 24% compared with the second quarter, helped by government subsidies, and its 20% gross margins topped peers like ReneSola (NYSE: SOL ) and MEMC Electronic Materials (NYSE: WFR ) .
Like Yingli Green Energy (NYSE: YGE ) and ReneSola, LDK Solar has invested significant capital to begin producing polysilicon at its own facilities. It still expects to eventually benefit from lower silicon production costs and higher margins, but some CAPS members like its move to sell a 15% stake in a plant for $219 million, which will improve its financial situation and help with some liquidity concerns.
Some investors anticipate that the strength in Chinese solar demand will continue for LDK Solar and others like JA Solar (Nasdaq: JASO ) because the government plans to substantially increase its environmental budget in the next five years. LDK Solar has won some contracts for projects in various Chinese provinces and says its wafer plant is running at full capacity.
Do you think LDK Solar deserves its improved status? Add your thoughts in the comments box below, or head over to CAPS to rate the company and check out all the information the community offers, absolutely free.
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