North Coast Solar Stocks

May 1, 2009

Yingli Rallies; Hapolaim Flips Rating To Buy From Sell

Filed under: YGE — Tags: , , , , — Jason @ 2:23 pm

Posted by Eric Savitz

Yingli Green Energy (YGE) shares are getting a lift today from a fairly unlikely source: Hapoalim Securities analyst Gordon Johnson, who remains among the most bearish analysts on the Street about solar stocks.

Johnson today raised his rating on Yingli to Buy from Sell, setting a $10 price target.

Johnson’s thesis is that the Street is “grossly underestimating” the company’s cost reduction potential this year and next. He says a recent move in the stock is “largely due to misconceptions on the Asian solar market” – he thinks the Street is “grossly over-estimating” 2009 solar PV demand in China – and he adds that in general the solar industry this year will be defined by lower gross margins, disappointing earnings announcements and dilutive capital restructurings.

But he also contends that YGE is making impressive progress bringing down costs, through integration of cell and wafer manufacturing, combined with the low labor and and energy costs available in China. “While YGE still faces sector headwinds, we believe the company is among the best-positioned solar PV companies longer-term,” he writes, adding that shorter-term, earnings should beat the consensus, driven by higher-than-expected cost reductions. “We recommend accumulating the shares ahead of the Street’s recogniion of the company’s cost advantage,” he writes.

Johnson upped his 2009 EPS estimate to 86 cents from 32 cents, above the consensus at 64 cents. For 2010, he now sees $1.20, up from 53 cents, and above the Street at 99 cents.

YGE today is up 59 cents, or 8.5%, to $7.57.


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