China's Suntech Power rises on bargain hunting

Its American Depositary Receipts--which have fallen about 12 percent since it reported its first-quarter results on May 23--climbed $3.62, or 9.7 percent, to $41.10.

American Depositary Receipts, or ADRs, are securities designed to allow U.S. investors to trade shares of companies based overseas.

Cowen and Co. analyst Rob Stone, who reiterated his "Outperform" rating on the shares, wrote in a client note that concerns over possible reductions in Spanish incentives for the solar industry plus overall prospects for the sector have been overstated.

Suntech has indicated it already has Spanish orders for 25 percent to 30 percent of its revenue for the second half of the year, Stone said, calling the company's shares "significantly undervalued."

The stock is off 50 percent since the start of the year.

The analyst also estimated that while most analysts expect next year's earnings per share to be, on average, $2.58, he estimates earnings per share have the potential to come in as high as $3.35, mainly driven by gross margin expansion.

"We believe Suntech is an attractive pure play on the growing global (photovoltaic) market, and especially well positioned for access to local resources and longer-term domestic end-market demand," Stone wrote.