From Tech Trader Daily:
The solar sector is taking some heat this morning from a highly bearish evaluation of the current picture for the industry by Barclays Capital analyst Vishal Shah.
Shah says investors have been focused on the outlook for demand in the second half of 2010, given the uncertainties over the timing and extent of subsidy reductions in Germany, but he sees reasons to think 2011 could pose further trouble for the group.
“Several trends suggest that 2011 growth could turn out to be disappointing relative to expectations, accelerating the marker share shift to low-cost solar producers with relatively strong balance sheets,” he writes. Shah sees demand risks in China, Italy and U.S. markets.
“Given the lack of meaningful sustainable demand beyond 2010, intensifying currency headwinds and prospects of declining sector profitability, we expect solar shares to remain under pressure until demand from either the U.S. or China becomes more certain,” he writes.
Shah made the following ratings and price target changes:
Shah in particular thinks U.S. demand could disappoint investors; he cut his forecast for 2011 U.S. demand to 1.45GW from 2.4 GW; he cut his global demand forecast for next year to 10 GW, from 11 GW....MORE
- Evergreen Solar (ESLR): To Underweight, from Equal Weight; target to 50 cents, from $1.50.
- LDK Solar (LDK): To Underweight, from Equal Weight; target to $4, from $8.
- Suntech (STP): To Equal Weight, from Overweight; target to $12, from $16.
- Yingli Green Energy (YGE): To Equal Weight from Overweight; target to $11, from $19.
- First Solar (FSLR): Keeps Equal Weight, but cuts target to $100, from $120.
- Trina Solar (TSL): Keeps Equal Weight, but cuts target to $23, from $28.
- SunPower (SPWRA): Keeps Overweight, but cuts target to $28, from $35.