Sunday, September 7, 2014

GT Advanced Solar Module Meets Specs, Boosts Stock

GT Advanced Technologies stock jumped Monday after the company announced that its Merlin solar-module technology, which aims to reduce the amount of silver needed to connect solar cells, has met several industry certification standards following tests to guarantee its long-term reliability.

GT Advanced Technologies (NASDAQ:GTAT) stock was up more than 5.5% in afternoon trading in the stock market today, near 16.50. GT stock has touched its all-time high of 20.54 on July 2 and has more than doubled this year.

The Merrimack, N.H.-based company makes advanced materials and crystal growth equipment, including synthetic sapphire crystal products, for the consumer electronics, power electronics, solar and LED industries.

By replacing silver with less-expensive copper components in solar modules, the company expects to lower the cost and weight of modules, improving cell efficiency and reliability, said GT Advanced General Manager Venkatesan Murali at last week's North America PV (photovoltaic) Solar Conference held in San Jose, Calif.

"We can rethink module form because it's 50% lighter and smaller than conventional modules," Murali said.

The company estimates its Merlin yearly revenue at $400 million to $1 billion by 2018, assuming a market penetration of 8%-20%.

GT Advanced said that it is in "active discussions with select lead customers" to bring Merlin to market, with plans for an early 2015 commercial launch. GT claims that existing cell manufacturing plants can easily support Merlin, following a simple upgrade.

In a conference call with analysts last week to discuss Q2 earnings, GT Advanced CEO Tom Gutierrez said that the company expects more than 80% of the year's revenue to come from its sapphire segment. "We booked $75 million of equipment orders in Q2, including $72 million from sapphire equipment."

GT Advanced received a $103 million prepayment in Q2 from Apple (NASDAQ:AAPL) for sapphire components to be used in sapphire displays in its next smartphone, the iPhone 6. GT Advanced expects a final $139 million prepayment by the end of October.

Apple signed a deal with GT Advanced in November to manufacture sapphire crystals at a new plant in Arizona, allowing Apple to produce sapphire rather than having to source it.

But it's uncertain just how much the GT product might be used in smartphone and smartwatch (iWatch) displays. Apple is widely expected to unveil the iPhone 6 at a Sept. 9 media event, but it's uncertain if the iWatch will also be unveiled.

GT Advanced "remains well positioned to pioneer cover glass," Canaccord Genuity analyst Jonathan Dorsheimer said in a research note Tuesday, noting that "as the company 'de-risks' the story, we see the opportunity for earnings and multiple expansion."

GT Advanced said last week that it expects full-year revenue to be in the lower half of its prior $600 million-$800 million range, while analysts polled by Thomson Reuters expect $666.8 million. GT Advanced expects earnings per share minus items of 12 cents to 18 cents, the high end of its previous range of 2 cents to 18 cents. Analysts have forecast 3 cents.


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