UBS downgrades Wacker's rating from 'buy' to 'neutral'

25 April 2012 11:17  [Source: ICIS news]

LONDON (ICIS)--UBS has downgraded its share rating for Germany-based chemical firm Wacker Chemie to “neutral” from “buy” based on lower-than-expected polysilicon prices in the first quarter, the investment bank said on Wednesday.

UBS said that Wacker’s polysilicon assets will depreciate on a faster base due to lower prices and intensified competition.

The investment bank lowered its estimates for Wacker’s earnings per share in 2012 and 2013 by 47% for both years.

“This increase in depreciation substantially lowers our EBIT [earnings before interest and taxes] assumptions for ’12-13 and, given the recent changes in the industry, we expect maintenance CAPEX [capital expenditure] in polysilicon to increase in line with the effect of accelerated depreciation,” UBS said.

Additional restructuring charges in Wacker’s silicon wafers subsidiary, Siltronic, also led to the downgrade.

Siltronic announced in March that it will cut around 500 jobs in Germany and the US, to meet a permanently low level of demand.

UBS also decreased Wacker’s price target to €61 ($80) from €95.

At 09:48 GMT, Wacker’s shares were trading on Germany’s Xetra stock exchange at €57.56, up by 0.40% from the previous closing price.

($1 = €0.76)


By: Franco Capaldo
+44 (0)20 8652 3214



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