Wednesday, August 6, 2008

Trina Solar: A Tale of Two Analysts (TSL)

When word of Trina's promo deal with Barcelona's Espanyol soccer club first started circulating I decided against posting anything. It's smart marketing: Solar>Spain>Soccer but not make-or-break, mission critical (I've got a buddy who goes with "mish crit" because he's too busy to say all the syllables) stuff.
Today I ran across a writer whose name I am going to remember, Tina Wang. From Forbes:
Trina Solar is getting its name up in lights in Europe through a sponsorship deal with a soccer club....
TW continues:
...The 11-year-old company is expanding rapidly to prepare for a tough market ahead, analysts say.

“A lot of the smaller players will have a tough time surviving long-term in the solar space,” said Brian Yerger, an analyst who tracks Trina Solar for Jesup & Lamont Securities Corp. “The solar industry is anticipated to go thru a rapid price decline” as a bearish market shies away from risk.

Trina Solar’s first-quarter profit soared 168.7% to $12.9 million on a 183.6% rise in sales to $120.7 million (See " Rising Costs Are Partly Cloudy For Trina Solar"). But it is a small player relative to market leader Suntech Power, which posted first-quarter revenue of $434.5 million (See " Bright Future Seen For Suntech Power"). Trina Solar’s production capacity is estimated at 350 megawatts, compared with Suntech Power’s 540 megawatts.

“The solar industry is a new industry with young companies and a lot of risk involved. When the market pulls back and reduces its exposure to risk, then these solar and renewable energy companies in general are more susceptible to large price swings,” Yerger said....

...Trina Solar, whose shares rose 2.06% Tuesday to $26.79, last month pre-announced second-quarter revenue in the range of $200 million to $205 million, and sales of 47 megawatts of solar modules....

I'm sure she doesn't have a mean bone in her body but by pointing out the age of the company and its revenues she pretty much makes it look like the analyst had his lips set on auto-babble.

The other analyst quoted comes off quite a bit better: was a major motivation of the agreement, according to Robert W. Stone, managing director of equity research for Cowen & Co....

...Yerger’s forecast for 2008 is $3.26 in earnings per ADS. Stone has an “outperform” recommendation on the firm’s stock.

Of course I may be biased:

Solar: Cowen & Co. Analysts Are Demi-Gods (ENER, ESLR, FSLR, HOKU, SPWR, STP, and TSL.)

Blowout Quarter: Energy Conversion Devices (ENER)