Monday, June 1, 2009

Solar: Street Feeling Upbeat After Intersolar Conference (Short 'em?)

Funny, I was just musing "What level should I start scaling in some shorts?". I'm not kidding.
Time to look at the MACD, grab a Big Mac, be the mac daddy, maybe Mack the Knife*.
From Tech Trader Daily:

It’s a nice day for the solar sector, which is getting a boost from a flurry of analyst comments following the recently completed Intersolar trade show in Munich.

“By the end of Intersolar, we sensed growing, ableit cautious optimism,” Cowen’s Robert Stone writes in a research note this morning. “ASPs are still uncertain, but volumes should definitely be up in Q2/Q3, and deals were starting to close.” He says that despite a strong rebound in the stocks since early March, the group “remains mostly undervalued.”

Likewise, Thomas Weisel Partners analyst Jeff Osborne writes that “it appears demand trends in Europe are accelerating with many companies indicating a 40%-100% increase in units in Q2 sequentially, lead mainly by Germany with some credit easing in Mediterranean countries a well.” Osbrone writes, however, that the solar market remains “dysfunctional in many regards, with the demand outlook flattish at best in 2009 vs. 2008.” He contends the recent rally reflects a rising Euro, an increase in oil prices and a return to investing in high beta names.

Barclays Capital analyst Vishal Shah writes that several German distributors have placed new orders with Chinese module players, “suggesting to us that inventory levels are depleted and product is getting installed.” He says checks suggest both Suntech and Yingli won significant business at the show, and that distributors are shifting toward lower ASP product to increase margins. Shah remains bullish in Yingli and JA Solar, while advising profit taking in Canadian Solar and Solarfun.

FBR Capital’s Mehdi Hosseini writes that while the buzz was about the pickup in project activities and the associated procurement, “what we observed is that [a] majority of discussed projects hav eyet to be financed!” He also writes that after meeting with more than 40 companies at the conference, “many cell and module manufacturing companies have become incrementally positive and optimistic,” with project activity picking up. However, he adds that “as the discussion carried to contracts from downstream companies…the level of enthusiasm lessened somewhat.”

Here’s a rundown on some of today’s calls...MORE

*Okay, one out of four. How wrong can you go with music by Kurt Weill, lyrics by Bertolt Brecht?

Here's Die Moritat von Mackie Messer: