Analyst rates MEMC a 'Buy,' sees strong demand

An analyst on Wednesday set a "Buy" rating on shares of silicon wafer maker MEMC Electronic Materials Inc., predicting high silicon prices and strong demand over the next year and a half to two years would give it a boost.

Kaufman Brothers analyst Theodore O'Neill started covering the stock with price target of $80 per share, which implies MEMC stock will rise 17.8 percent over the next year. The stock last traded above $80 on March 27.

Shares of the St. Peters., Mo., company rose 48 cents to $68.37 in morning trading.

Semiconductor and solar panel makers need MEMC's purified silicon wafers, O'Neill said. Prices are high because silicon makers have been unable to keep up with rapidly increased demand from the solar industry, and O'Neill said wafer makers are only starting to add new production capacity.

He added that that expansion may still fall short of demand in 2009, particularly if oil prices reach $200 per barrel. While capacity expansion may prove difficult for some companies, O'Neill said MEMC will not have that problem.