Bad News Weighs on Solar Stocks, But Demand Picture Appears Strong
Friday, August 27th 2010 4:34 PM
By GetSolar Staff.
Fears about a slowdown in the American economy sent solar shares lower as the week drew to a close, but solar companies appear bullish about their near- and medium-term prospects.
On Thursday, news of weakness in the U.S. housing sector sent stock markets downward - and solar stocks slumped across the board. Solar-module manufacturer Suntech Power Holdings (NYSE: STP) fell 2.5 percent, while solar-wafer company LDK Solar (NYSE: LDK) posted a 2.4 percent drop. China Sunergy (NASDAQ: CSUN), which produces solar cells, lost 1.8 percent - and ReneSola (NYSE: SOL) dropped by 4.7 percent.
The broad declines may only be a reflection of the U.S. economy's weakness, though. Demand for solar products seems to be looking up.
UBS raised its solar-demand forecast for 2010 and 2011 by almost a third - and in a Monday report, a UBS analyst raised his rating of First Solar (NASDAQ: FSLR) from "neutral" to "buy." The company's stock moved higher on the news.
LDK, meanwhile, said Monday that it was opening a second production facility in China. The factory - which will make silicon solar panel components - should be at full capacity within three to six months.
Suntech also came into the spotlight this week when a research firm, IMS Research, said it shipped more solar modules than any other company in the second quarter. On the whole, Chinese module companies performed well, IMS analyst Sam Wilkinson wrote in a note.
"Suntech, Trina (NYSE: TSL) and Yingli's (NYSE: YGE) combined shipments increased by 14 percent, significantly more than Sharp and First Solar, the other suppliers in the top five," Wilkinson said.
Another research report, from technology research company iSuppli, predicted that solar demand will rise in Ontario. The number of solar installations in the province will triple this year, iSuppli said - and local solar firms like Canadian Solar (NASDAQ: CSIQ) will probably benefit.
Canada isn't the only market where solar is doing well, though. Trina Solar, which sells primarily into Europe, reported that demand for its products was healthy in the second quarter. Morningstar, in a research note, predicted that the company's margins would narrow next year as subsidies are cut in the Czech Republic, Italy and Germany - but it said "sufficient demand will remain in these countries and elsewhere." Trina will continue to perform well, Morningstar expects.
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Fears about a slowdown in the American economy sent solar shares lower as the week drew to a close, but solar companies appear bullish about their near- and medium-term prospects.
