Wells Fargo solar analyst Sam Dubinsky dropped coverage of LDK Solar Co Ltd on Tuesday, saying he was "not convinced shares are a viable investment."
The move comes a day after the Chinese solar wafer maker sharply lowered its third-quarter and full-year revenue outlooks and said it would write down up to $50 million of inventories due to rapidly falling prices for solar products.
LDK Solar officials could not immediately be reached for comment on the move by Wells Fargo.
LDK shares were down 10 cents, or 2.8 percent, at $3.43 Tuesday on the New York Stock Exchange. The stock has lost over three-quarters of its value since hitting a 52-week high of $14.96 in February.
In a note to clients, Dubinsky said the company faced increased liquidity risk due to the severe solar market downturn and a weak balance sheet that is made up of mostly short-term debt.
"LDK's ability to operate as an ongoing entity will be predicated on the patience of Chinese banks to continue to extend short-term credit; the ultimate payback on debt looks unlikely," Dubinsky wrote.
As of June 30, LDK listed $2.2 billion in short-term borrowings and current installments of long-term borrowings, with $5.5 billion in total liabilities.
LDK has said it plans to spin off its polysilicon manufacturing business, a move that could help it pay down its debt-load. That plan, however, is more challenging given the weak economic climate, Dubinsky said.
(Reporting by Nichola Groom, editing by Gerald E. McCormick)