Solarworld AG (SWV), Germany’s biggest solar-panel maker, dropped to an eight-year low in Frankfurt trading after Commerzbank AG cut its rating on the stock.
Solarworld fell as much as 9.2 percent to 1.112 euros, the lowest price since April 2004, and was at 1.133 euros at 12:40 p.m. local time. The shares have slumped 65 percent this year, valuing the company at 127.4 million euros ($155.3 million).
Commerzbank lowered its recommendation on the stock to sell from hold today and reduced its price estimate to 80 euro cents from 2.50 euros, saying earnings before interest and tax will remain in “negative territory” amid “severe” competition and tighter project financing.
Solarworld, along with peers Conergy AG (CGYK) and Q-Cells SE (QCE), has struggled to cope with waning demand in Europe, where Germany, Italy and France have cut premiums paid for power from solar panels. Germany’s Centrotherm Photovoltaic AG filed for bankruptcy protection on July 10, which helped push domestic competitor SMA Solar Technology to a record low last week.
Solarworld, based in Bonn, may have difficulty paying the interest on its “huge debt pile,” Lauren Licuanan, an analyst at Commerzbank, said in a note to investors. Net debt is likely to be more than 10 times earnings before interest, tax, depreciation and amortization in 2012, her estimates show.
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