Versant Analyst Massimo Fiore Says Sell 5N Plus

5N Plus (TSX:VNP) yesterday reported results from the fiscal year ended December 31st, 2011. Although the fiscal year was comprised of just seven months, the company’s losses were substantial.

5N Plus lost $21.6-million, or $.31 cents per share on revenues of $391.7-million, which was more than double the prior fiscal year revenues of $180-million for the twelve month period ended May 31, 2011. The company also incurred (US) $45.6M in impairment charges, including $33.4 million in inventory write-downs.

Versant Partners analyst Massimo Fiore says the Q4, 2011, in particular was surprising, and not in a good way. In a research update this morning, he said: “While we had anticipated weak demand from the solar sector impacting CdTe sales and a drastic drop in secondary metal prices impacting margins, results were worse than our pessimistic view. Fiore downgraded the stock to Sell from Neutral, while placing his target price under review.

Today’s downgrade follows a period of success for the Montreal solar player. A few years ago, the company, which produces essential components of thin-film solar modules, became a primary material supplier to US cleantech giant First Solar. When First Solar’s revenue was skyrocketing they were being supplied cadmium telluride cells by 5N Plus.

5N Plus, meanwhile, was mirroring the action, albeit on a much smaller scale. Sales increased from $10.3 million for the fiscal year ended May 31, 2005 to over $181 million in fiscal 2011. That moved shares of the company from a 2008 low of $3.50 to a high of $9.85 this time last year, but since that time the stock’s price has nearly returned to 2008 levels.

5N Plus’ topline was no doubt helped by last April’s acquisition of Belgium’s MCP Group, which was one of the world’s leading producers of specialty metals such as bismuth, gallium, indium, selenium and tellurium. The acquisition, which cost just over $315 million, dramatically increased 5N’s scale, but the company is clearly having trouble digesting the pickup amid the current tumult in the solar business. Management also said adding MCP exposed it to greater seasonality.

Shares of 5N Plus closed today down 20% to $4.03.