SunEdison Semi Downgraded At Macquarie, At Odds With Redstone Analyst

Sunedison Semiconductor Ltd SEMI is down more than 5 percent on the day following Wednesday's earnings release and call.

Prior to the release, Redstone upgraded the company from a previous Sell rating to Positive, while increasing the price target from $6.50 to $13. The firm justified the rating by highlighting the company's announcement regarding strategic alternatives moving forward.

Redstone analyst Jagadish Iyer elaborated, "Whilst we had always articulated multiple times previously that industry consolidation was the only salvation, the recent share price drop to an all-time low reflects a market cap ~$150 million for a company that is likely to do $800–$900 million in revenues this year, just accelerated the inevitable."

Related Link: Redstone's Iyer Upgrades SunEdison Semi

Macquarie Disagrees

However, not all analysts share Redstone's view.

In a recent note from Macquarie, the company received a downgraded rating based on "near term hurdles," despite the long-term thesis remaining intact.

"Our Outperform thesis on SEMI has revolved around the lack of incremental supply in the wafer industry leading to price increases and margin leverage," Macquarie analyst Deepon Nag explained. "While we continue to believe that industry economics don't justify new capacity, we clearly underestimated the impact of a softening demand environment and strengthening US dollar on pricing."

Therefore, Macquarie revised its earnings and target price on SunEdison Semi, downgrading the rating to Neutral and lower the price target to $7.50.

"We are revising our CY6 revenue and EPS estimates from $819 million and ($1.40) (Non-GAAP) to $764 million and ($1.45) (Non-GAPP) and our CY17 revenue and EPS estimates from $888 million and $0.20 (Non-GAAP) to $829 million and $0.07."

At time of writing, SunEdison Semi was down 5.21 percent on the day at $6.92.