Power-One, Inc. (PWER)

[eastunder]

Power-One Recovers Despite Q1 Forecast Cut.
By Tiernan Ray

http://blogs.barrons.com/techtraderdaily/2011/04/07/power-one-recovers-despite-q1-forecast-cut/?mod=yahoobarrons

Shares of Power-One (PWER), which makes inverters that convert power from renewable energy sources, are down 29 cents, or 3.5%, at $8, after the company late yesterday cut its Q1 outlook, citing “near-term feed-in-tariff uncertainty in Italy and Germany,” referring to European subsidies for renewable energy.

Power-One now sees revenue of $240 million to $245 million, down from a prior $260 million to $290 million, it said. Analysts had been modeling $269 million, on average.

CEO Richard Thompson remarked,

Although we expect to post a nearly 60 percent increase in revenue in the first quarter of 2011 compared to 2010, we’ve revised our guidance for the quarter due to recent adverse conditions in the European solar market. We still anticipate European countries such as Italy and Germany will continue to support solar adoption to reduce reliance on non-renewable sources of power. Further, for the remainder of 2011 and 2012, we believe we are better positioned to handle similar regional anomalies due to our expanded product line and focus on developing new markets, including the United States, China and India.

Who told you so? Gordon Johnson of Axiom Capital, I would note, actually cut his revenue estimate for PWER for the quarter last week to $248 million from a prior $271 million estimate. Johnson’s estimate cut came after competitor SMA Solar Technology AG of Germany on March 30th forecast Q1 revenue below estimates, citing Italian policy changes.

By and large, bulls and bears are sticking to their views on the stock this morning, while all are trimming estimates:

Jesse Pichel with Jefferies & Co. reiterates a Buy rating on the stock, while cutting his price target to $10 from $12, writing that, “We believe a weak Q1 is mostly factored into expectations given the slow-down in Italy and seasonality / bad weather in Germany. With Germany picking up and an Italian decision ~1 week away, we see sequential growth in Q2.” Pichel cut his 2011 estimates to $1.12 billion from $1.18 billion in revenue, and to 90 cents in EPS from $1.05 previously. Pichel looks to Power-One’s analyst day on May 17 as a “catalyst.” The “read-through is negative on inverter companies,” he writes, including Satcon (SATC), although he notes that SATC “is less exposed to Europe (15%) than peers.” SATC shares today are down 6 cents, or 1.6%, at $3.44.

Edwin Mok with Needham & Co. reiterated a Hold rating on PWER shares and cut his 2011 estimate to $1.05 billion in revenue from a prior $1.2 billion estimate, and cut his EPS estimate to 98 cents from $1.28. With a higher mix of revenue now destined to come from Power-One’s “traditional” power business, Mok sees operating margin declining to 22% this year from 25% last year.

Mark Bachman with Auriga Securities maintains a Buy rating on the shares and a $13 price target. He estimates 175 megawatts of shipments were lost “as a result of the Italian work stoppage.” Bachman cut his full-year revenue view to $1.21 billion in revenue from a prior $1.34 billion, and cut his EPS estimate to $1.10 from $1.30. Bachman is “encouraged” by industry data showing “increasing applications using PWER inverters.” However, he’s also concerned, because PWER had no presence at the “PV America” trade show this week, even though all of the company’s competitors were there.