Cowen: Solar Estimates Too Bright

Cowen analyst Robert Stone Monday morning cut estimates for the solar sector across the board, asserting that Street estimates for at least the first half of 2009 are too high, and there could be further downside if project credit conditions do not improve.

“Street estimates generally have Q1 revenue flat-to-up sequentially, but we see a down tick as more likely,” he writes. “The main sticking point appears to be project financing, rather than the price of modules. Smaller systems are more likely to find cash buyers or owner equity financing along with renewable-specific loans in markets such as Germany and Japan. However, larger projects are likely to be hampered by tight credit and lack of third-party tax equity.”

Stone cut his 2009 demand forecast to 7 GW, up 22%, from 9 GW, or up 48%. His 2010 forecast drops to 10.2 GW, from 14 GW. He sees flat-to-down industry revenues in 2009 due to falling ASPs.

Despite all of that, Stone says that there is potential for a short-term rally depending on the specifics for renewable energy in the pending stimulus package.

Stone made the following estimate cuts:

• China Sunergy (CSUN): ‘09 to 23 cents, from 59 cents; ‘10 to 84 cents, from 95 cents.
• Energy Conversion Devices (ENER): ‘09 to $1.51, from $1.68; ‘10 to $2.68, from $3.48.
• Evergreen Solar (ESLR): ‘09 to a loss of 2 cents, from a profit of 7 cents; ‘10 to 25 cents, from 29 cents.
• First Solar (FSLR): ‘09 to $6.07, from $7.42; ‘10 to $8.36, from $10.50.
• SunPower (SPWR): ‘09 to $2.34, from $3; ‘10 to $3.24, from $4.10.
• Trina Solar (TSL): ‘09 to $1.48, from $3.64; ‘10 to $2.78, from $4.98.

In another note Monday morning, Collins Stewart analyst Daniel Ries projected that solar module demand in ‘09 would grow 22.5% from 2008 to 5.3 GW, with a year-over-year decline in Q1. He sees 2009 solar module industry revenue down 13%, “as the shift to lower cost thin-film modules and the decline in standard module pricing overwhelm the 22.5% volume growth.” He says that with prices likely to fall 28% for standard polysilicon-based modules, only vendors capable of winning significant market share will report revenue growth in 2009. And he says that makes of intermediate goods - cells, wafers and polysilicon - will likely suffer an even greater revenue decline than the module makers.

Among the stocks for which Cowen cut estimates, all are down at least 5% this morning.

Comments

[Universal H...:]

Ummmm, is he talkin' about tomatoes?

Jan 12 05:38 PM

[TraderMom:]

We might see more down room for FSLR. There is no way it can buck the down trend of the general market.

Jan 13 12:50 AM

[gebby:]

analyst admits stocks he is lowering estimates on are trading for 5x 2009 earnings, he shows also they are trading at 3x 2010 earnngs. but he is too afraid to say buy until somebody else does first because he might be wrong. somehow i remember strong buys when the stocks were at all time highs.

Jan 13 08:43 AM

[gebby:]

CORRECTION TP Suntech Power sets rumor straight: 800, not 4,000, layoffs - JLM Pacific Epoch (10.96 )

JLM Pacific Epoch reports the co and chairman Dr. Zhengrong Shi said that the company has cut 800 employees, about 10% of its staff, reports China Business News in a follow-up to rumors that the company was laying off 4,000 employees between October and January. Shi said that the company delayed plans released in late 2008 to recruit 2,000 new employees and expand production from 1GW to 1.5GW in 2009, and that company policy is to terminate 10% of its employees annually for poor performance. Factory production has fallen from about 85% before the financial crisis to more than 50% due to lower cell and module prices, large-sale raw material purchases last August and September and extended payment periods for some clients, said Shi. Suntech has signed orders to deliver more than 800MW in 2009, including 650MW for European clients, up from a total of 500MW in 2008, said Shi.

so much for relying on the news media

Jan 13 09:19 AM

[31October:]

Re: Nick the Greek Socrates
What are you talking about? Are you advocating smoking tomato leaves?

Jan 13 11:17 AM

[tessant:]

oy vey...come on savitz.....such a hater....

scott
solarfeeds

Jan 13 11:27 AM