Solar shares, which in recent weeks have staged a ferocious rally, are getting hammered Monday, as investors take profits amid concerns about pricing and demand in the sector. As I noted last week, even some of the smallest and most speculative solar names had taken off, making the sector look more than a little frothy. But with some smaller solar players running into trouble - Hoku on Friday said it might run out of cash before it can complete a planned polysilicon factory - the stocks today are losing ground.
In a research report late Friday, FBR Capital analyst Mehdi Hosseini said that product prices in the sector are falling more than expected. He says that while investors are anticipating “a hockey-stick shaped demand uptick in the U.S., China and other emerging countries,” he instead sees a slow roll-out of subsidies, tightened terms from financiers and over-hyped news items, some from untrustworthy sources.
Hosseini writes that declining prices are not stimulating demand as many had expected, and that the take-off of demand growth is being push into the first half 2010. “In this environment of unstable pricing and financing conditions…investors are better off staying on the sidelines and focusing more on poly manufacturers,” he writes, adding that with more than a quarter’s worth of finished goods in inventory, and weak end-market demand due tight finance conditions, Q2 EPS reports could be disappointing.
Hosseini writes that spot poly prices have fallen as low as $60/kg in the Asian market, though most is priced at the $65-$70/kg range, well below the $90-$95 price in early April. He says price for six-inch solar wafers have fallen as low at $3, with most sold in the $3.20-$3.40 range. Cell prices, he says, are in the $1.30 to $1.50/watt range, down from $1.80-$2 in early April.
Here’s a look at some of Monday’s biggest movers in the solar sector:
- Evergreen Solar (ESLR), a big winner last week, is down 25 cents, or 9.5%, to $2.37.
- GT Solar (SOLR) is down 94 cents, or 13.6%, to $5.95.
- JA Solar (JASO), which was downgraded today by Lazard Capital to Hold from Buy, is down 37 cents, or 6.5%, to $5.30.
- Solarfun (SOLF) is down 70 cents, or 9.1%, to $7.02.
- China Sunergy (CSUN) is down 50 cents, or 8.8%, to $5.19.
- First Solar (FSLR) is down $5.18, or 2.8%, to $178.62.
- DayStar (DSTI) is down 11 cents, or 11.4%, to 87 cents.