LDK Solar (LDK) shares are trading sharply lower this morning after ThinkEquity analyst Jonathan Hoopes cut his rating on the stock to Sell from Buy. He cut his target price on the stock to–get this–$4.50, from $45.

The more bearish stance follows an earnings warning from the company earlier this week. Hoopes points out that the company’s $210 million to $220 million inventory write-down raises new concerns about a 2007 controversy involving allegations over inventory accounting issues.

As Hoopes notes, in October 2007, former LDK controller Charley Situ alleged discrepancies in the company’s accounting for “possibly unusable inventory.” In December 2007, he recalls, LDK announced that an investigating committee found no material errors in the company’s state silicon inventory and said that a provision for obsolete or excess silicon feedstock was not required.

Read the rest of this post

ThinkEquity’s Jonathan Hoopes this morning made an aggressive call on First Solar (FSLR), asserting that a “high-level inventory analysis” of six of the company’s major customers lead him to conclude that there maybe be substantial numbers of First Solar panels sitting in customer warehouses. And he says that they aren’t likely to move out soon, “given weakening economies, lower natural gas prices, higher interest rates and tougher underwriting requirements.”

Hoopes contends that global solar demand headwinds are unlikely to subside for at least the next few quarters. “Take-or-pay contracts are only as good as the counter-party’s willingness and ability to do either,” he notes. Hoopes points out that Q-Cells, on its Dec. 9 conference call, said it will allow a flexible delivery schedule for customers and will also offer discounted prices to help share the burden.”

Read the rest of this post