North Coast Solar Stocks

August 27, 2009

Solar stocks mixed on earnings news

Filed under: CSUN, ENER, FSLR, SRE, STP, TSL — Tags: , , , , , — Jason @ 4:07 pm

Solar stocks mixed as more solar companies post results, analysts warn of near-term challenges

Thursday August 27, 2009, 4:07 pm EDT

NEW YORK (AP) — Solar stocks were mixed on Thursday as two solar companies reported quarterly results and analysts raised concerns about near-term challenges for solar companies.

Solar panel product maker Energy Conversion Devices Inc. (ENER) posted a fiscal fourth-quarter loss, driven by hefty one-time charges and a sharp drop in demand for solar products as commercial construction declined, building owners deferred reroofing projects and project financing constraints continued.

China Sunergy Co. Ltd. (CSUN) said its second-quarter profit fell 43 percent but stronger shipments pushed results beyond analyst expectations.

Solar companies have been pummeled by industry-wide price cuts for solar panels, driven by an oversupply of product, scaled-back demand and the falling price of polysilicon, a key raw ingredient.

Credit Suisse analyst Satya Kumar cut his price target for Suntech Power Holdings Co. Ltd. (STP) to $12.50 from $16.50, citing the solar power company’s sharp second-quarter profit drop. The company also estimated a 15 percent to 20 percent decline in average selling price in the third quarter.

Kumar said he prefers shares of Trina Solar Ltd. (TSL) over Suntech, given Trina’s stronger growth in shipments and lower polysilicon to panel cost structure. Kumar rates Suntech “Neutral.”

FBR Capital Markets analyst Mehdi Hosseini said that even First Solar (FSLR), the nation’s largest solar panel maker and industry leader, faces a number of challenges in the near-term, namely, the delayed construction of the Sempra (SRE) 48-MW project, uncertainties around the timing of financing for the Blythe and Tristate projects and the recent departure of the company’s executive vice president of global marketing and business development. The company also needs to find a replacement for Mike Ahearn, the company’s current CEO who announced earlier this year he is stepping down.

“Recent trends/checks support our thesis that…downside risks have yet to be fully dialed into the stock,” Hosseini said. “We caution investors against unrealistic expectations associated with First Solar over the past year.”

Hosseini rates the company “Underperform” with a price target of $110. Shares of First Solar fell $1.96, or 1.6 percent, to $124.76.

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