Solar Stocks: J.P. Morgan Shuffles Ratings

J.P. Morgan analyst Christopher Blansett Thursday morning shuffled his ratings on some solar stocks, advising investors to “shift to a more defensive stance.” For the second half, he expects “an uncertain landscape for solar energy companies with both positive and negative forces in play that are likely to cause solar energy stock prices performance to be choppy and relatively range bound.” Here’s a rundown on his revised ratings:

• Energy Conversion Devices (ENER): Launches with Overweight rating. “We think the company is currently trading like a value stock while participating in a high-growth industry.” He writes ENER has been one of the most aggressive in cutting capital spending and conserving cash, “causing us to believe the stock has limited downside risk.”
• Evergreen Solar (ESLR): Upgraded to Overweight from Underweight, “as there appear to be few expectations built into this stock.” He asserts that the stock trades at a significant discount to peer module makers due to its historical poor product development performance, but that the company’s new Devens facility is operating smoothly, allowing ESLR to participate in the next demand upturn and perform at least in line with peer module makers.
• Ascent Solar (ASTI): Upgraded to Neutral from Underweight, “as the company looks to be ahead of schedule in terms of product development. A new focus on military and aerospace applications is “very positive as it allows Ascent to sell high-margin products with little competition,” although he adds that “risk stil remains as the company has yet to ramp into full production.”
• First Solar (FSLR): Downgraded To Neutral, from Overweight. “We the current stock price does nto reflect a potential negative margin reset or the possibility Germany could make a larger than sceduled subsidy reduction in 2010,” he writes. The analyst all worries that crystalline silicon modile makers who are benefiting from low poly prices will continue to price aggressively, even at their own cash costs.
• SunPower (SPWRA): Upgraded to Neutral from Underweight. “SunPower will benefit from lower poly costs and a rebound in the U.S. market, but is spending excessive cap ex in our view and is fighting a declining module ASP trend.”

In Thursday’s trading:

• ENER is up $1.12, or 7.78%, to $15.44.
• ESLR is up 29 cents, or 13.5%, to $2.44.
• ASTI is up 15 cents, or 1.9%, to $8.05.
• FSLR is up 50 cents, or 0.3%, to $155.79.
• SPWRA is down 41 cents, or 1.5%, to $26.65.

Original post

Comments

[Zenfar:]

Good recap well done sir!

Jul 02 11:18 AM

[Mad Hedge F...:]

Use this dip to buy solar. If you look carefully at your electric bill and calculate the cost per kilowatt hours each month as I do, you will notice that the price has been going up for the last ten years. This is partly because of ineptly handled deregulation, but also because our utility, Pacific Gas & Electric (PCG) is mandated by state law to reduce greenhouse gas emissions. Last year, the collapse of the economy and crude prices drove the cost of thin film solar’s primary raw material, polysilicon, down dramatically. The cost curve is falling, the demand curve is rising, and it is only a matter of time before they cross. The gap now is only a few cents per kilowatt, and that can easily be bridged with government subsidies. This industry is on the verge of becoming truly profitable. All it might take is another rise in crude prices, something you can count on. Watch behemoth First solar (FSLR) position itself to cash in, as well as Suntech Power (STP) and SunPower (SPWR. But also watch the volatility, as this is definitely an “E” ticket ride.

Jul 02 11:31 AM

[HerrHansa:]

I had a small position in Evergreen Solar (ESLR) just prior to their last share issuance. After the surprise of seeing that issuance go at $1.80 a share, I decided to buy more and double my position. I liked the companies technology prior to the share issuance, so I saw it as still a good value play. However, I really think all these are long term, especially since it takes a while to install these energy solutions. I expect more here in 2010 than the two remaining quarters of 2009.

Jul 02 01:26 PM

[User 398524:]

Re: First Solar article:
Who typeset this? Misspelled words along with words needing to be transposed in order to make sense.
It's bad enough to read the bad news about a company, let alone having to decipher the article.
Ted M

Jul 02 04:45 PM

[Danny Newton:]

I don't understand the connection between oil and solar. Very little generation is done by diesel and gas. Solar can not take over the fraction produced with oil. If you need that much energy, a fuel cell would be better and cheaper than a large array and it would work any time of the day. The fire marshall will be a little squimish about having the hydrogen and the oxygen in the building, though. When we get fire marshals in space, we will have to retire the shuttle.

The whole idea that utilities will use a higher fraction of renewables by increasing renewables is predicated on the theory that more renewable sources are easily built. To meet Cap and Trade goals at least $688 Billion in solar must be built and the energy produced would only take care of the population increase for about 8 years if you ignore the 30% loss in converting from DC to AC and the line losses which could be as high as two kilowatts lost for every three produced. Energy generation is not immune to Cap and Trade Legislation. All forms of generation will be more expensive but turning off the offending power will not cost the utility a lot of money. The effect of making everything more expensive seems no different than suffeing a massive inflationary surge. It was high inflation costs that were implemented in cost overruns in the atomic power programs in the 70's.

Turning off the coal spigot will mean rotating blackouts which will be cheaper for the utility companies but not for, hospitals, ISP's credit card companies and air traffic control facilities. They have their own back up systems which are based in oil. It won't be long before the power company charges higher fees for being onn 24 hours a day. All of the general rules about doing the wash and the dishes at night might have to be revised.

The first blackout should be in Washington,

Jul 04 02:18 AM