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Brokerage Beat: JinkoSolar Holding, LDK Solar, and JPMorgan Chase

LDK was downgraded after delaying a debt offering, while JKS and JPM were hit with rare negative notes

by 5/20/2011 10:45:34 AM
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Chinese solar concerns JinkoSolar Holding Co., Ltd. (JKS - 25.22) and LDK Solar Co., Ltd. (LDK - 7.56), as well as financial titan JPMorgan Chase & Co. (JPM - 43.90), were all on analysts' radar today. However, to put today's fresh brokerage attention into perspective, we have to consider each stock's technical and sentiment backdrops.

Jumping right in... Collins Stewart trimmed its price target on JKS to $34.50 from $38, but maintained its "buy" endorsement. However, bearish brokerage notes are few and far between for the stock, which currently boasts six "strong buy" ratings and just one "sell" suggestion, Zacks reports. Plus, Thomson Reuters pegs the stock's consensus 12-month price target at $33.50, implying expected upside of 30% to JKS' closing price of $25.77 on Thursday.

JKS analystsDuring the past 60 sessions, JKS has lagged the broader S&P 500 Index (SPX) by 11 percentage points, on a relative strength basis. From a longer-term perspective, the equity has spent most of 2011 bouncing along support in the $24-$25 region, with the $27.50-$28.50 neighborhood serving as resistance during the past couple of months.

Should the security continue to underperform on the charts, the extreme optimism among the analyst crowd leaves JKS vulnerable to additional negative notes -- which could exacerbate the equity's technical challenges of late.

Moving on, LDK last night delayed a proposed offering of senior notes -- the proceeds of which were intended to pay down short-term debt -- due to escalating interest rates. While CEO Xiaofeng Peng said the company still expects to "generate sufficient operating cash flow to support our business plan," the shares of LDK have tumbled more than 7.5% in the first hour of trading, and have garnered negative attention from analysts at Kaufman Bros.

Specifically, the brokerage firm voiced concerns about the postponement of LDK's second debt offering of the year, downgrading the stock to "hold" from "buy." In addition, the analysts significantly slashed their price target on the equity to $8 from $24.

However, there could be plenty more where that came from. According to Thomson Reuters, the average 12-month price target on the stock stands at $14 -- a premium of almost 71% to LDK's settlement price of $8.21 on Thursday. Likewise, seven out of 15 analysts maintain "buy" or better ratings on the stock, Zacks reports.

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