SunEdison Sees Short Interest Surge (AEIS, SCTY, SUNE)
Unlike other leading U.S. solar-related stocks, the number of SunEdison (NYSE: SUNE) shares sold short surged between the December 13 and December 31 settlement dates.
Advanced Energy Industries (NASDAQ: AEIS) and SolarCity (NASDAQ: SCTY) saw the most significant downswings in short interest in the period. Short sellers also shied away from First Solar, GT Advanced Technologies, Real Goods Solar and SunPower Holdings.
Furthermore, the number of U.S.-listed shares (or ADRs) sold short of foreign-based companies Canadian Solar, China Sunergy, LDK Solar and Trina Solar also shrank. But short interest in JA Solar Holdings, ReneSola and Yingli Green Energy grew in the period.
Here is a quick look at how Advanced Energy Industries, Solar City and SunEdison have fared and what analysts expect from them.
Advanced Energy Industries
This maker of power conversion products saw short interest shrink more than 10 percent in the period to around 646,000 shares. That was the smallest number of shares sold short in the past year, and it represents less than two percent of the float. The days to cover remained at less than two.
Analysts way overestimated earnings per share (EPS) in the previous two quarters but still expect strong earnings and revenue growth in the quarter just ended. The company's market capitalization is near $950 million. The price-to-earnings (P/E) ratio is higher than the industry average, but the long-term EPS growth forecast is almost 34 percent.
Only three of the eight analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares, while two rate it at Underperform. But their mean price target, which is where the analysts expect the share price to go, is more than six percent higher than the current share price.
The share price has risen almost 12 percent over the past month, though it pulled back a bit at the end of last week. The stock has outperformed competitor MKS Instruments over the past six months, but it has also underperformed the Nasdaq and the S&P 500.
Short interest in this provider of solar energy systems to residential and commercial customers fell about 28 percent to more than 6.45 million shares. The number of shares sold short was more than 20 percent of the total float, and the lowest since September. Days to cover was about two.
This San Mateo, California-based company set a $200 million credit facility during the period. SolarCity now has a market cap of more than $5 billion. The long-term EPS growth forecast is more than 34 percent, but note that both the return on equity and the operating margin are in the red.
Only one of the seven polled analysts recommends buying shares. The consensus recommendation has been to hold shares for the past three months. The analysts' mean price target is less than the current share price. Unless individual targets are raised, upside potential is not indicated.
Shares reached a post-IPO high last week, and the share price is almost 29 percent higher than a month ago. Over the past six months, the stock has outperformed not only the Nasdaq and the S&P 500, but also smaller competitor Renesola.
The number of shares sold short in the former MEMC Electronic Materials surged about 169 percent in the period to almost 44 million, or more than 16 percent of the float. That was by far the highest level of short interest in the past year. It would take about five days to close out all of the short positions.
One of the world's largest solar installers and developers, SunEdison reduced its debt during the period in an effort to strengthen its balance sheet and minimize its annual interest expense. SunEdison has a market cap near $3.8 billion. While it has a long-term EPS growth forecast of about 15 percent, its return on equity and operating margin are in negative territory.
Ten of the 15 analysts surveyed recommend buying SunEdison shares, with two of them rating the stock at Strong Buy. They see a little headroom for shares, as their mean price target indicates more than five percent potential upside. That is less than the 52-week high reached last week, though.
The share price has risen more than 25 percent in the past month, and it is still more than 63 percent higher than six months ago. In that time, the stock has outperformed the likes of Advanced Energy Industries and Analog Devices, as well as the broader markets.
At the time of this writing, the author had no position in the mentioned equities.
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