JA Solar: The Stock Is Underappreciated, Says Roth Capital
JA Solar Holdings (JASO) posted a slight second-quarter miss, issued a weaker-than-expected third-quarter shipment guide, and lowered its GM outlook. As a result, estimates are likely coming down. In reaction to the results, Roth Capital analyst Philip Shen reiterated a Buy rating on JASO with a $18 price target.
Shen noted, “We continue to like JASO given its high quality balance sheet, exposure to the attractive Japanese market, and attractive relative valuation (trading at 3.8x our 2015 EBITDA vs. peers of 5.6x).” The analyst added, “Although JASO generated a slight Q2 miss, weaker-than expected Q3 shipment guide (mp 745MW vs. our 770MW), and a lower outlook for GMs, management took 2014 guidance up by 200MW to 3GW (midpoint) due primarily to China. The project business is developing well, though it is still lagging relative to others. We note JASO has arguably the best balance sheet in our coverage universe (net debt/capital of ~20% vs. peers of ~51%). Moreover, with high exposure to the attractive Japanese market, leading cell technology, and an inexpensive relative valuation, we believe the stock is underappreciated. The stock, however, may need more company-specific catalysts to come into focus (better-than-expected project development progress, international capacity build-out, etc.) in order for JASO to breakout relative to peers over the near-term.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Philip Shen has a total average return of 3.0% and a 47.3% success rate. Shen has a -16.2% average return when recommending JASO, and is ranked #1368 out of 3255 analysts.