Solar stocks are having another rough day, one which looks all that much worse with the Dow Jones Industrial Average up well over 200 points. A number of analysts Monday morning wrote notes on their trips to the recent European solar conference in Valencia, Spain. There were no bombshells that I found; but there does seem to be some concern about the pricing outlook for 2009, as Reuters noted today.
Richard Keiser, technology strategist at Bernstein Research, wrote Monday morning that an “astounding number” of solar panel companies demonstrated products at the show - and offered aggressive expansion plans. He says that suggests fears of commoditizaiton and over-supply “are well founded.” He says event leading manufacturers - like SunPower (SPWR) - will face some pricing pressures.
Keiser also says the combination of module oversupply and mitigating silicon prices will shift value to manufacturers with large scale advantages - including LDK (LDK) and Q-Cells - will be beneficiaries. He also says equipment demand is expanding, and so added GT Solar (SOLR) to his model portfolio, which also includes a position in Applied Materials (AMAT). On the other hand, he removed First Solar (FSLR) from the portfolio in anticipation of higher competition in thin-film solar, and out of concerns about potential multiple compression, with the stock trading at 9x 2009 sales, and 62x 2008 EPS.
Oppenheimer’s Sam Dubinsky wrote Monday that he is becoming more positive on some solar stocks, with a “decent amount” of risk already priced in. But he also writes that he still doesn’t believe the bull thesis on the group. “Significant module capacity is coming on-line as the majority of companies have not taken the throttle off capacity expansion plans,” he writes. “At the same time, global demand could soften on a fall-off in Spain and a slowdown in the U.S. Germany, France, Italy, and Greece will likely all be healthy markets, though it is still too early to tell whether they can absorb all the module capacity quick enough to prevent an inventory or ASP problem.”
Dubinksy writes that he also worries about currency, which helped the sector in the first half of this year but could hurt in the second half and in 2009. He notes that the Euro has fallen nearly 10% since hitting a record high against the dollar in mid July. “If the Euro continues to weaken, ASPs may appear worse and revenue upside would be harder to achieve; margins could also compress for some companies,” he writes.
In Monday’s trading:
- First Solar is down $12.34, or 5.2%, to $223.67.
- Suntech (STP) is down $2.77, or 6.4%, to $40.50.
- JA Solar (JASO) is down $1.07, or 6.9%, to $14.47.
- GT Solar is down 75 cents, or 6.9%, to $10.15.
- Canadian Solar (CSIQ) is down $1.19, or 4.3%, to $26.63.
- MEMC Electronic Materials (WFR) is down $1.41, or 3.5%, to $38.78.
- Yingli Green Energy (YGE) is down 53 cents, or 3.5%, to $14.78.
This article has 7 comments:
I know there are government sponsored inducements for homeowners to buy solar but they are too little to defray the initial expense. And, even before the original investment is recovered, more expense is incurred in maintenance and repair.
Then, there are the rapid increases in hydrogen technology that will be inexpensive and available 24/7 instead of the daylight hours of solar on, only, sunny days.
Solar is a lousy idea and the market knows it. Unfortunately, the wacko environmentalists, who have little to know knowledge of economics, technology, or science, will never realize it.
Solar panels have an energy return on investment on the order of two to three years. Sales of solar panels are increasing, not decreasing. As the article points out, a huge amount of new product is coming out and this is driving down price, not a lack of buyers. In most of the US you can't get solar panels installed for the rest of this year. Everything is sold out.
1. Solar is a great Idea if it was cheaper, a lot cheaper. It is not efficient and does not have grid parity and may never reach it given the conditions.
2. Cypress is selling their stake in SPWR. If it was "going to the moon" why would they divest themselves? Not to mention the insiders have been selling just like Mozillo was at Coutrywide and the guys at IndyMac. Intense heavy insider selling is never a good thing no matter how you slice it up.
4. We need cheap renewable. Wind, nuclear, and nat gas are all great sources.
5. THe styock trades at a high p/e ratio. Their own CEO warned about a decrease in prices in 2009. Decreasing prices are goood if thgere is a more expensive product there to replace it. The chip manufacturers always kept the entry level PC at 1K. THe next model was faster and more powerful for the same 1K although the older chips became less expensive and were therefore "lowered" the price of all chips, but the profit was in the most expensive chips. Solar panels are not incrteasing in efficuiency in that manner. They have to rely on external forces, ie higher nat gas and coal to reach grid parity and become more efficient and cheaper. Not the same economics.
4. Saving the planet has nothing to do with being green. Since the Ice Age, the earth has been warming. Even wonder why the large reptiles were able to roam the earth? They were cold blooded. They needed the earth to be warm. Once it cooled, they died. Simple as that. You don't need the retarded Al Gore to spell it out for yoou. Since then, the earth has tried to reach it's "true" climate, which is warmer than we are now. The only was to stop it is to shade the earth from the sun on a large scale, like a meteor strike, volcano or possibly a giant "shade satellite" that could shade the earth at times to help cool the air.
So don't hate the one who tries to bring reason to you. Consider the information, and never say you weren't given ample warning.