Knobias Clip Report (05-22-2008)
Submitted By Knobias ClipReport
ESLR: Shares Spike on New Contract Despite Dip in Oil
Thursday’s session saw oil finally take a breath from the recent rally though in overnight trade, crude reached highs over $135 a barrel. With the International Energy Agency supposedly reporting a report displaying a sharp downward revision to their oil supply forecast, the price could begin to creep back up in the coming days.
With oil still at elevated levels, one can assume that alternative sources of energy would be in favor with investors and over the past month, that’s has normally been the case. The Claymore ETF TAN which is a collection of solar names started the month of May in the $25 area before hitting highs of almost $20 on Monday but sank over 1.5% on Thursday. Most every name in the industry was red besides one, Evergreen Solar Inc. (ESLR).
The Company develops, manufactures and markets solar power products using proprietary, low-cost manufacturing technologies. The Company’s patented wafer technology, known as String Ribbon, uses significantly less polysilicon than conventional processes.
On Thursday, the Company announced it signed two new long-term sales contracts. Evergreen Solar and German-based Ralos Vertriebs GmbH signed an agreement valued at approximately $750 million for panel deliveries beginning in 2008 and extending through 2013. Combined with another agreement signed last week with a United States-based installer, Evergreen has new contractual backlog of approximately $1 billion.
The solar panels for these two contracts will be manufactured at the company’s Massachusetts facility, which will begin panel production in July, and represent approximately 35% of the expected 160MW of annual production capacity at the facility through 2013.
In addition to these two new contracts, the Company has six other customer contracts with a current total backlog of approximately $850 million, which will primarily be supplied by EverQ, its German-based joint venture.
Following the news, shares spiked at the bell to highs over $12.00 before consolidating the remainder of the day and closing at $10.94, up over 20%. Besides Thursday’s gain, the name had been somewhat left off of the solar rally that has taken place over the past two months. Since mid March, names such as CSIQ, FSLR, EMKR, LDK, SOLF, SPWR, STP, TSL, YGE, and ASTI have all seen huge gains but saw large pullbacks Thursday on the halt in oil price spikes.
With the news, ESLR may attempt to catch the others and their recent gains. On the other hand, if oil continues with more bearish action, the name could quickly give up Thursday’s gain. With that in mind, investors would be wise to watch.
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