Jefferies Downgrades Fushi Copperweld (FSIN) to Hold, Poor Guidance

Jefferies downgraded shares of Fushi Copperweld (NASDAQ: FSIN) to a Hold rating from their previous rating of Buy due to their weak 2011 guidance, their need to delay its 10-K filing pending an accounting review of certain non-operating, non-cash items from 2007 to 2010, and on the impact of these factors on the stocks price. They are lowering their price target to $11 from $14.

The company released their guidance for 2011 well below what the firm and street was expecting as they are not expected to experience any growth and may even see a negative growth. FSIN did indicate that they are working currently on developing a copper-clad business in China and elsewhere to offset the weak China 3G market. Their growth is is happening at a much slower rate than Jefferies was anticipating that FSIN will have to invest more than they expected to monetize this business.

The firm is lowering their 2011 and 2012 EPS estimates by $0.28 to $1.22 and $1.40. Jefferies comments that, "We believe the offer by CEO Li Fu, affiliates and Abax Global Capital to buy 100% of FSIN at $11.50/share is still bona fide. Management supports this view. But the disappointing outlook may impact Abax's desire to finance the deal at $11.50/share. Any potential restatements may also impact the financing, albeit to a lesser extent since they appear historical and non-operating."

For more ratings news on Fushi Copperweld click here and for the rating history of Fushi Copperweld click here.

Shares of Fushi Copperweld closed at $8.68 yesterday.

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