J.P. Morgan Maintains MEMC Electronic Materials Underweight Rating, $9.50 PT (WFR)

J.P. Morgan maintained its MEMC Electronic Materials WFR Underweight rating at $9.50 price target in a research report published today. In the report, J.P. Morgan states, "Despite better than expected volumes, we believe MEMC will continue to see meaningful margin headwinds in 2011, especially as SunEdison continues to grow as a proportionate part of the overall sales mix. We estimate semi wafer gross margins remain below 20% and well off "normalized" levels of past cycles, with this not likely to change in the near-term given what we believe is apt to be a softer pricing environment in coming quarters. Moreover, while SunEdison appears to be tracking ahead of our volume expectations, we estimate margins in this segment were nearly ~500bps lower than our proforma estimates in C4Q10. This is despite big exposure to Italy where project pricing has tended to be relatively attractive, especially relative to projects in the North American market which will account for a bulk of SunEdison's exposure in 2011." Shares of MEMC Electronic Materials were at $12.13 at the time of posting in pre-market trading, up 4.30% from Tuesday's market close.