Shares of Solarfun jump after 3Q profit

AP News
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Posted: Nov 19, 2009 1:46 PM

Shares of Solarfun Power Holdings Co. Ltd. jumped Thursday, a day after the Chinese solar cell maker posted a third-quarter profit.

Oppenheimer analyst Sam Dubinsky upgraded Solarfun Thursday to "Outperform" from "Perform," saying its shares' risk and reward are more favorable than most stocks in the sector. He said the company's stock is "underappreciated."

"Yesterday's third-quarter results corroborate that turnaround efforts are bearing fruit," he wrote in a client note.

Solarfun said rising demand pushed third-quarter shipments up 59 percent to a record high of 102.6 megawatts. Improved shipments and a 36 percent decline in the cost of revenue helped widen margins and outweigh the negative impact of declining selling prices, the company said.

Quarterly earnings rose to 136.6 million renminbi ($20 million), or 2.53 renminbi per American Depository Share (37 cents per ADS), compared with a loss of 44.3 million renminbi, or 0.86 renminbi per ADS, during the same period last year.

Dubinsky set a $10 price target, implying he expects the stock to rally 54 percent from Wednesday's close.

Shares of Solarfun rose 38 cents, or 5.8 percent, to $6.86 in afternoon trading. Meanwhile, the broader markets declined in a sell-off triggered by a stronger dollar and weak economic data.