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(Reuters) - Shares of 5N Plus Inc (VNP.TO) fell 24 percent to more than a three-year low, after the company posted a quarterly loss and said it signed a new supply agreement with its key customer, First Solar Inc (FSLR.O), that would lower selling prices.
The Canadian specialty metals producer, which supplies cadmium telluride (CdTe) used to make thin-film solar panels, also incurred impairment charges of $45.6 million in the quarter.
"CdTe pricing has been adjusted downwards to reflect market prices for solar products so we anticipate any impact from higher demand to be cancelled out by lower margins," analyst Massimo Fiore of Versant Partners wrote in a note to clients.
Fiore, who downgraded the stock to "sell" from "neutral," said he expects strong short-term struggles due to lack of demand and weak pricing.
"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 said.
The Montreal, Quebec-based company -- which also supplies gallium, bismuth and germanium -- said demand has weakened for most of its products.
National Bank also downgraded the stock to "sector perform" from "outperform" and cut its price target on the stock by C$3.00 to C$6.00.
5N Plus' fiscal year ended December 31, 2011, comprised of seven months due to a change in fiscal year end.
5N Plus shares, which have lost more than a third of their value in the last six months, were down 80 Canadian cents at C$4.24 on Tuesday morning on the Toronto Stock Exchange. The stock was one of the top percentage losers on the exchange.
Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Joyjeet Das