Thursday, October 28, 2010

Hexcel (NYSE:HXL) Wind Growth Slowing Down

Alternative energy companies will remain under pressure, and that will be true of Hexcel (NYSE:HXL) as it pertains to their wind power segment, as the abundance of natural gas is expected to slow down demand and capital expenditure on companies producing wind products.

UBS (NYSE:UBS) said they're maintaining a "Neutral" on the company as recovery in the sector will take a long time. We don't see growth in that area for some time. After all, how long will it take for natural gas resources to slow down? It could be decades before they do, and probably into well over a 100 years. Not great news for the wind, solar and nuclear industries, among others.

"We have lowered our 2011 EPS estimate to $0.95 from $1.00 to account for a slower recovery in wind and also the headwind from a weaker dollar attributable to HXL’s significant Europe production. Our 2012-14 EPS estimates have also moved lower to account for a slower wind recovery. Vestas

today came out and forecast roughly 15% growth in shipments in 2011, below our prior forecast for wind. We remain cautious on HXL given the potential for wind growth to disappoint and A350 to slide to the right combined with its premium valuation."

Hexcel closed down Wednesday at $17.80, losing $0.29, or 1.60 percent. UBS has a price target of $18 on them.

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