Solar Targets Slashed as Demand Seen Dropping by 25%

Barclays Capital analyst Vishal Shah Tuesday morning cut his ratings on both First Solar (FSLR) and SunPower (SPWRA) to Equal Weight from Overweight, citing continued concerns that tight credit markets may hurt solar sector demand in Q2 and Q3. “With over 1 GW of inventory in the channel, any demand recovery is unlikely to result in overall industry shipments growth until Q4,” he writes.

Shah now sees global photovoltaic shipments of 3.8 GW in 2009, down 25% from 2008, and below his previous forecast for a flat year. He expects the German market to be flat.

For SunPower, Shah slashed his price target to $18, from $35. His 2009 EPS estimate falls to $1.45 a share, from $2.30; for 2010, he sees profits of $2 a share.

For First Solar, his price target drops to $110, from $140; he trimmed his 2009 EPS estimate to $5.10, from $6, while maintaining his 2010 estimate of $8 a share.

Shah says his new downbeat view of the sector follows recent checks and negative datapoints from Monday’s earnings news from Energy Converson Devices (ENER). Also adding to the grim environment for the solar stocks Tuesday morning: disappointing results from Canadian Solar (CSIQ).

Put it altogether, and you get a recipe for a big sell-off in solar shares. In Tuesday’s trading:

• First Solar is down $12.06, or 9.7%, to $112.80.
• SunPower is down $2.87, or 12.3%, to $20.44.
• Energy Conversion Devices is down $4.66, or 25.3%, to $13.77.
• Canadian Solar is down 48 cents, or 12.2%, to $3.40.

Original post

Comments

[disdaniel:]

I think these "solar" analysts are taking the results of 1 bad quarter, and projecting them out for the year.

"News" of writedowns on inventory and raw materials is to be expected given the precipitious unwinding of the silicon shortage (coincident with the credit crunch)--which is rippling through to finished panel prices. I think investors (and presumably these analysts work for investors) care more about how the company(s) will do over the next few years than the last few months...

Mar 17 11:52 AM

[aquaculture:]

3.8 GW for 2009?
FIT application data shows that much installed on German and French rooftops in 2009. (Since 2008, France has a FIT of 55 eurocents/kwh.)
For this to be true, the rest of world demand: U.S., Japan, South-Korea, Italy, etc. etc would have to fall to zero in 2009.

Just because hardly any installations take place in the winter you cannot extrapolate that.
For instance as per CSIQ cc the first 2 weeks of march saw more shipment than januari and februari combined.

FSLR and ENER are thin film players and they do hurt because of project financing issues; these panels have too low efficiency to be installed on rooftops.

Mar 17 04:01 PM

[aquaculture:]

hmm:

seekingalpha.com/artic...

Mar 18 08:37 AM

[tginomorebush:]

savage continues his assault on solar energy ....... constant shorts by barrons ............

Mar 18 09:24 AM

[quick:]

Ha, good call aquaculture! They were upgrading at the top, and downgrading at the bottom. Typical analysts!


On Mar 18 08:37 AM aquaculture wrote:

> hmm:
>
> seekingalpha.com/artic...

Mar 18 10:05 AM

[HEYJOSE01915:]

I agree with the tenor of the previous comments-- my valuation model is based on eps growth rates going forward as far in to the future as First Call projects consensus from analysts-- the growth rate for FSLR going from 09 to 10 is 56% and for ENER going from June 10 {fy} to June11{fy] is presently 49%-- not too shabby if close to actual results-- on this basis ENER could sell in another year many multiples higher than current price and FSLR could be double current price. This assumes market is stable to bullish going into 2010. In bearish markets like present stock prices more determined by short term traders than fundamental long term analysis

Mar 19 12:04 AM