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I am taking a short in Energy Conversion Devices (ENER, news, msgs), an alternative-energy company, on an earnings play. I also need to balance my current long positions with something I feel will pan out.
On Wednesday, Energy Conversion Devices announced a plan to replace the entire management team in hopes of delivering better results. But I do not believe prospects will brighten anytime soon.
While the notion of changing the management team for the good of the future is great, the company has failed to deliver its earlier promises time and time again, and so far the company has not been remotely close to profitability. Perhaps due to strong overseas competition, it is now having a harder time competing and winning projects fast enough to drive revenue and earnings growth.
Until I see Energy Conversion Devices deliver consistent results, I think the stock is overvalued here. Due to the lack of focus, I do not believe the company will meet analysts' revenue and earnings projections for the foreseeable future.
Any number of mishaps could also cause the company to slide much deeper into the red, and this is not a stock worth waiting for.
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