Zacks_Analysts' Blog : Evergreen's Reverse Stock Split - Analyst Blog

To move ahead with its capital reorganization plan solar products manufacturer Evergreen Solar Inc. (ESLRD) has implemented a 1-for-6 reverse stock split, effective January 1, 2011. The reverse split will reduce the outstanding shares of the company to 35 million from the previous level of 209 million.

Besides the reverse stock split, other key elements in the capital reorganization plan include raising capital by selling up to $40,000,000 aggregate principal amount of new 4% Convertible Subordinated Notes due 2020 and increasing the authorized shares of the company after the reverse split to ensure that the company has sufficient shares available for future issuances.

As a result of this reverse split, Evergreen Solar's common stock will trade under a new CUSIP number, 30033R306, and will temporarily trade under the symbol "ESLRD" for 20 trading days beginning January 3, 2011, following which the company will again start to trade as "ESLR."

Evergreen finished the third quarter of 2010 with a loss higher than the Zacks Consensus Estimate. The Zacks Consensus Estimates for fourth-quarter 2010, fiscal year 2010 and fiscal year 2011 are a loss of 12 cents per share, 38 cents per share and 26 cents per share, respectively.    

Evergreen's competitors, Trina Solar (TSL) and First Solar (FSLR), have the wherewithal to produce their solar panels and materials at a much cheaper cost than the company and at the same time grow at a faster clip.

Evergreen Solar currently retains a Zacks #3 Rank (short-term Hold rating). We maintain a Neutral rating on the stock. The value of Evergreen's shares decreased considerably in 2010. We expect the shares might regain some value in 2011, provided the restructuring plans are implemented properly and the cost reductions are in place.

Based in Marlboro, Massachusetts, Evergreen Solar Inc. develops, manufactures, and markets solar power products primarily in the United States and Europe. The company manufactures String Ribbon solar panels utilizing its proprietary wafer manufacturing technology.