FromTech Trader Daily:
After a 70% rally off the March low, it might be time to get more cautious on the solar stocks.
At least, that is the advice this morning from Barclays Capital analyst Vishal Shah. He thinks the recent rally makes the stocks less attractive headed into Q2 earnings season, and advises taking a “selective approach.” In connection with the broader call, he cut price targets on Energy Conversion Devices (ENER), First Solar (FSLR), Suntech (STP) and Yingli (YGE).
The bottom line, Shah writes, is that he sees downside risk to shipments, margins and operating expense assumptions, which could drive valuations lower. He cites the following risk factors for the group:
- Germany concentration risk is increasing, with 50%-75% of shipments to Germany.
- Q3 is likely the peak for industry shipment as the German market is likely to be seasonally weak in Q4 and Q1, while new China and U.S. subsidy programs not likely to offset German market declines....MORE