Thursday, August 28, 2008

Solar: See You in October (Exceptin' ENER; ESLR; FSLR; SPWR; STP; TSL)

From Tech Trader Daily:

Solar Stocks: Cowen Sees ASPs Down 10%-15% In 2009

Pricing for solar modules in 2009 are likely to drop 10%-15% in 2009, with supply and demand largely in balance, according to Cowen analyst Robert Stone.

While that sound troubling, Stone notes that there are fears in the market that pricing could drop as much as 20%-25%, due to an expected sharp reduction in subsidies in Spain. But Stone sees offsetting factors, including enhanced U.S. subsidies, rapid growth in Italy and France and the emergence of demand in new regions, including the Middle East.

Stone sees solar demand of 6GW this year, increasing to 9GW in 2009 and 14GW in 2010. that view reflects his belief that Congress will pass a multi-year extension of the solar investment tax credit in the first half of 2009, “with higher residential credits and utility participation.” He says lower prices should boost demand in Germany, spark growth in Japan. “Italy appears close to grid parity,” he adds, “while Middle Eastern countries could deploy PV [photovoltaics] to preserve valuable hydrocarbons for export.”

Stone’s top picks are the thin-film players Energy Conversion Devices (ENER) and First Solar (FSLR); he’s also recommending crystalline silicon companies “with stronger supply portfolios,” including SunPower (SPWR), Suntech (STP), Evergreen Solar (ESLR) and Trina Solar (TSL).


I don't usually cut & paste an entire post (quality deserves traffic) but chopping Eric Savitz's succinct piece would lose not just flavor but facts.
(Besides, he justified, I gave him three links.)

There are a lot of downticks in the sector today. Personally I think average selling prices won't drop 15% and ENER's earnings release was just the signal for the herd to move on.
Consumer non-durables anyone?

As we said last Friday:

Earnings season is winding down and if past patterns hold, attention will drift away from the sector. Next week SOLF reports on the 27th and ENER wraps it up on the 28th.