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SunEdison Lowers Q4 & FY13 Guidance

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Solar technology company SunEdison Inc. has lowered its fourth-quarter 2013 and fiscal 2013 revenue estimate of Semiconductor Materials. Moreover, the company also reduced its previously forecasted non-GAAP solar energy systems sales volume.

During the last-reported quarter (third-quarter 2013), SunEdison forecasted its fourth-quarter 2013 revenues from Semiconductor Materials in the range of $220 million to $230 million, which now has been lowered to $205 million to $215 million primarily due to lower volumes. Plagued by soft demand and market weakness, SunEdison also lowered the fiscal 2013 Semiconductor Materials revenue forecast from the range of $920 million-$930 million to $905 million-$915 million.

Moreover, the company lowered its non-GAAP solar energy systems sales volume for the fourth quarter and fiscal 2013 from the range of 234 MW-264 MW and 405 MW-435 MW to 209 MW-234 MW and 380 MW-405 MW, respectively. SunEdison’s lowered forecasts were primarily due to the retention of additional projects for SunEdison Yield Co. Despite these declines in sales volumes, the company stuck to its previous average project pricing range of $2.75/watt-$3.50/watt for fourth-quarter 2013 and $3.10/watt-$3.40/watt for fiscal 2013.

The company also reiterated the capital expenditure forecast of $28 million to $38 million and $130 million to $140 million for the fourth quarter of 2013 and fiscal 2013, respectively.

SunEdison’s current spate of lowered forecasts reflects a tepid demand environment and continuous pricing pressures. Though the Solar segment has not performed well in the last two quarters, we believe that there is still immense potential due to its improving backlog and project pipeline.

We also consider SunEdison’s recent tie-up with Brazil’s Petrobras to build one of the largest solar photovoltaic power plants as a positive. This venture will help SunEdison to tap the Brazilian solar market and expand geographically.

Moreover, SunEdison is expected to benefit from the rise in demand for solar energy and the semiconductor business IPO that should further enable it to concentrate on its core competencies. 

However, competition from SunPower Corp (SPWR - Free Report) and First Solar Inc. (FSLR - Free Report) is a concern. Currently, SunEdison has a Zacks Rank #3 (Hold). Investors may also consider SanDisk Corp , which carries a Zacks Rank #1 (Strong Buy).

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