Solar Stocks Down Sharply on Profit Taking, Concern About Demand

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.

Original post

Comments

[Zenfar:]

Missed your report about them going up.

Jun 15 04:25 PM

[tessant:]

here are the positive solar stories:
solarfeeds.com
no bias - just news and commentary

Jun 15 07:18 PM

[tginomorebush:]

Always doom and gloom for solar ..... brought to you by eric the idiot!
Never a disclosure savitz!

Jun 16 08:12 AM

[zvikas:]

emcore is up in the pre 35% as a space solar company
it seems you have to be closer to sun to make some money

Jun 16 08:32 AM

[gebby:]

concerted effort to undermine solar investing. barrons and savitz, wall street journal, citibank, fox, ge all part of the effort. cant have solar threatening big oil and big investment anking. especially when the chinese are going to own solar,

Jun 16 11:28 AM

[HerrHansa:]

It's a slow moving segment. These things take time to build out, or even to negotiate contracts. First Solar (FLSR) has a bit too much day trader playing, which sometimes drags the sector around with it.

Take a look into the technologies, expenses, and expansion plans for each of these. When you find exclusive technologies, patents, cooperative manufacturing agreements, and reductions in expenses, then you are finding well run companies poised for growth. Definitely not all the stocks mentioned here are poised for growth, though it does seem these are near a bottom. The problem then becomes a move sideways for some of these players, rather than a move upwards.

Disclosure: own Evergreen Solar (ESLR)

Jun 16 02:26 PM

[Thomas Jowers:]

If Solar options were cheap (under $100) for the home, it could be anything that helps. Then I would be an early adopter, but until something is available, I will continue using my coal eating electric provider.

Jun 16 03:15 PM