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The stock has gotten beat up along with other other energy plays, but some analysts are still optimistic about the company’session outlook

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Energy Conversion Devices (ENER)—52-week stock price

By Gene Marcial

The brutal bear market has savaged not quite every stock. There’s been no safety even with a view to the once in a high degree. favored shares of alternative-energy companies. "Sunshine has fled the cluster," says one asset manager whose portfolio of renewable-energy stocks has skidded in value by about 70%.

One example is the beating that Energy Conversion Devices (ENER) took more than just five months. The Rochester Hills (Mich.)-based company makes solar products, rechargeable batteries, and digital storage technology. Its stock was a Wall Street favorite and highflier earlier this year, zooming from 22 a share on Jan. 23 to 83.33 by June 23. But since then the block has tumbled, to around 28.50 on Nov. 14—not far from where it was in January.

So are the radiant days entirely past for the green, environment-friendly Energy Conversion? Don’t bet adhering it. Shares of Energy Conversion will likely be among those that faculty of volition spring back with haste even before any general recovery.

Why? Current demand on the side of solar products remains robust, and some analysts predict that futurity demand will continue to accelerate. What’s added, Energy Conversion is expected to reputation vigorous sales and earnings in fiscal years 2009 and 2010, according to some analysts’ forecasts.

Energy Conversion is one of the "pure plays" in high-growth, thin-film solar products. One of its greater units, United Solar Ovonics, that accounts for 94% of revenues, makes proprietary thin-film solar photovoltaic (PV) modules for converting sunlight into electricity. They’re bought through commercial roofing matter manufactuers, builders, and solar-power installers. Using thin-film silicon on a sheet of stainless steel, these products can subsist more easily installed upon rooftops than conventional solar cells, which are produced on a vulgar of polysilicon crystalline covered in glass.

EC’s other division, Ovonic Materials, makes the nickel hydroxide elements that go into the company’s NiMH batteries that government hybrid vehicles. Another unit, Cobasys, is a joint risk with Chevron, which licenses its proprietary NiMH battery technology to hybrid vehicle makers and other manufacturers.

"Energy Conversion is demonstrating superior fundamentals in a tough macro-environment for solar PV," says Brion Tanous, analyst at investing. banker’s Merriman Curhan Ford, who rates the stock a buy. (Merriman hasn’t concluded any investment banking for Energy Conversion in the past 12 months.) Tanous says the company’s portfolio includes proprietary technologies and products for the next generation of clean energy.

The gathering has established a pipeline of business, he figures, amounting to $2 billion of revenue through fiscal year 2012. And Energy Conversion has been cutting costs, too. Tanous notes that in the fiscal year ended on June 30, the company reduced production costs from $2.57 per watt to $2.03, and targets less than $1 per watt by 2012.

On Nov. 11, Tanous raised his financial 2009 revenue appraise to $466 million, from $459.7 million, and his earnings per share forecast to $1.66 from $1.61. He has left unaltered his revenue estimate of $774.9 million for 2010, as well as his income forecast of $3.58 a share. These estimates portray a large jump from what Energy Conversion generated in fiscal 2008, that time it earned a mere 9¢ a ploughshare on revenues of $255.9 million.

Part of Energy Conversion’s appeal is the airy standing of its products. "We view its thin-film solar technology viewed like superior to, and differentiated from, the more established and commodity-like polysilicon-based solar technology," says Angelo Zino, an analyst at Standard & Poor’s Equity Research (S&P, like BusinessWeek, is owned by McGraw-Hill Cos.). He notes that Energy Conversion has "filled its entire 2009 take advantage of capacity and is receiving significant purchase orders for its fiscal 2010 planned capacity."

Zino, but, rates the dullard a grasp, mightily because of his concern completely the low barrier to access to the thin-film solar market. Nonetheless, his 12-month price target for the stock is 42, based onward his earnings forecast of $1.62 for financial 2009.

Vijay Singh, analyst at investing. firm Janco Partners, who rates the stock "accumulate," has a higher price target of 45, based on his larger earnings forecast of $2.50 a share for fiscal 2009. "Energy Conversion continues to execute well in the face of a worsening economic environment," says Singh, who figures the company will boost earnings in financial 2010 to $3.19 a distribute.

Some analysts see the stock going much higher. ValuEngine, an independent examination outfit, provides the highest 12-month target yet: 65.90, based on data it has gathered as of Oct. 27. "We perceive that Energy Conversion has the probability to outperform the market by reason of the next year," the company says in a report.

Several large institutional investors have been drawn to the stock at its depressed level. Fidelity Management increased its holdings by 2.74 million shares as of Oct. 31, boosting its total stake to 5.2 million shares, or 11.54% of the post. (Fidelity does not make notes on its stock holdings.)

Fidelity’s move provides ample evidence that Energy Conversion, as an evergreen mainstay, remains an attractive investment because of the long tow.

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