Thursday, March 25, 2010

"Solar: Morgan Stanley Says Buy FSLR, Hold ESLR, Sell ENER"

From Tech Trader Daily:

Morgan Stanley analyst Smittipon Srethapramote late yesterday picked up coverage of solar sector, with an “in-line” view of the group. He sees 3-year compound growth of 35% in solar installations, offset by a 10%-15% annual drop in module prices. The analyst contends that “select companies…should see higher growth and less ASP pressure,” by offering attractive economics for consumers, products for which customers can get financing and vertically integrating.

Srethapramote launched ratings on three companies:

  • First Solar (FSLR): He starts the company with an Overweight rating and $150 target. “We believe the market is too pessimistic on First Solar’s ASP development,” he writes. “Based on conversations with the company’s customers in the US and Europe, we believe First Solar will be able to realize higher module ASPs than the market expects. This is because customers are able to obtain better financing to install First Solar modules than peer products that are less tested. The market could also be underestimating module margins in its systems business, where we believe margins are higher than standalone module sales and will face less pricing pressure going forward.”