Solar Storm: FSLR, ENER, & SPWRA Dowgraded

by: Eric Savitz December 03, 2008 | about stocks: ENER / FSLR / SPWRA    

Eric Savitz

From Barron’s:
Introducing Barron’s Daily Stock Alert: Try it FREE for 30 days
Subscribe to Barron’s Online
Visit Barron’s New Market Data Center
Become a Contributor Submit an Article
  • Font Size:
  • Print

Wedbush Morgan solar analyst Al Kaschalk Wednesday morning turned more cautious on the sector, lowering his ratings on SunPower (SPWRA), First Solar (FSLR) and Energy Conversion Devices (ENER) to Hold from Buy.

The reasons for his more skeptical stance are familiar ones to anyone who has been tracking the industry’s recent tribulations:

  • Declining ASPs and spot polysilicon prices.
  • Increasing module supply.
  • Increased risk to 2009 revenues due to lack of financing for solar projects.
  • The impact of the appreciating dollar against the Euro.
  • Possible delays in utility scale projects from the economic downturn.
  • Increasingly negative investor sentiment toward solar stocks due to earnings risk and macro concerns.

Kaschalk cuts both price targets and estimate for the stocks.

  • SunPower: Cuts 2008 EPS to $1.01, from $1.07; 2009 to $2.22, from $2.27. Target to $27, from $32.
  • First Solar: Cuts 2008 to $3.88, from $3.90; 2009 to $7.35, from $7.74. Target to $110, from $175.
  • Energy Conversion Devices: Cuts FY June 2009 EPS to $1.62, from $1.73; FY 2010 to $3.10, from $3.22. Target to $24, from $43.

Here are a few company specific notes from Kaschalk:

  • SunPower: Notes that management has guided to a 10%-20% drop in module ASPs in 2009; but in the first half of Q4, module ASPs declined by 30%-plus. “Due to the current economic downturn,” he writes, “we believe that module supply in the market could increase substantially as competitors experience order cancellations, leading to a further drop in panel pricing.” And that could put the company’s guidance at risk.
  • First Solar: He notes that FSLR has acknowledged the lack of financing for PV projects in Europe outside of Germany, but asserted that independent power producers have adequate capital to bridge delays in funding into 2009. But he contends that “should the credit crisis not improve in early 2009, customer projects are likely to be postponed or canceled.”
  • Energy Conversion Devices: The analyst says ENER has asserted that is ample demand to replace customer cancellations due to the credit crisis. But he says that continuation of the current credit crunch for a few more months could lead ENER’s customers to delay or cancel orders. He also says a lack of credit could delay ENER’s manufacturing expansion plans.


SunPower Wednesday is down 2 cents, to $30.15. First Solar is off $3.29, or 2.8%, to $112.83. Energy Conversion Devices is down 79 cents, or 3.1%, to $24.90

Related Articles

This article has 4 comments:

  •  
    Dec 03 04:28 PM
    The Kaschalk's of the world are a dime a dozen; these kinds of analysts are 'glass half empty' kind of guys. They end up sounding like weather forecasters predicting 4-8 inches of snow and then we get dusted. Really, what until the week after JAN20 to tell me what your predictions for the industry are. The world is changing and Kaschalk and analysts like him are truly 'old skool' thinkers.

    ...if I were you I would buy, buy, buy on solar; these basement bargain prices will not last for long.
    Reply | Link to Comment
  •  
    Dec 04 03:59 AM
    FSLR's guidance for FY09 takes above mentioned factors into account. A thing to note is tht FSLR provides conservative guidance. Some other positive points 1) FSLR has managed to improved to its run rates for the past three quarter more than that required under its long-term agreements, which is 3% per annum; 2) FSLR expects to complete Malaysian plant 2 ahead of schedule; 3) FSLR recently entered the U.S. Residential segment through strategic alliance with Solarcity and will supply 100 MW over a fiver year term; and 4) extended contracts worth approx. 500 MW with key customers; key customers account for approx. 90% of net sales for FSLR.

    Reply | Link to Comment
  •  
    Dec 04 08:39 AM
    eric continues his assault on solar ......... do you report on anything else in your blogs?? or is this your total job for barrons?? alpha should look into your "method of madness" to bring down solar ........ are you a relative of king george iii bush or those running big oil? WHAT A JERK!
    Reply | Link to Comment
  •  
    Dec 04 12:37 PM
    Eric , Mountains do have two side an up side and the down side. Please continue to point out the down side out the mountain.
    The crack from the character that call himself nomorebush sure has enough negativity to implode all liberals. These are the same jerks that would post at their leftist spewing sites that ES only posted good things and I lost alot of $$$ because of him.
    TGI stop visting investment sites and go back to your Ombamnation sites .
    Oh by the way he no longer is going to be in front of his adoration followers no now he has a real job and not attending party after party.
    Eric keep up the reporting in both direction good and bad.
    I wish they did that back 10,20 30 and 40 years ago.
    Cheers DuffBeer
    Reply | Link to Comment
More Comments on SPWRA »
Top Rated Comment Streams:

Numbers are net rating-

See all Top 100 »
More by Eric Savitz

Investment Resources
Money Management
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Sell-Side Research
Earnings
Alternative Energy
Coal