Analyst Starts Coverage on Solar Sector with an Underperform; Sees Stocks Falling At Least Another 30-40%
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Yesterday, Hapoalim Securities initiated coverage on the Alternative Energy/Renewable Energy industry with a Market Underperform rating. The firm's report focused on the solar sector, as it believes that guidance within the group is still too aggressive, leaving room for stocks to fall another 30-40%.
Hapoalim believes that the credit crunch will have a much larger impact on the solar industry than the market is currently pricing in, pointing out that the average solar project installation is 50-70% debt financed. The firm sees much tighter lending standards creating serious risks to demand acceleration moving into next year.
With solar cell manufacturers guiding shipment supply growth in the range of 70-80% in 2009, the firm believes "an inflection point in oversupply will emerge, driving average selling prices significantly lower." Despite a drastic slide in the solar sector this year (Claymore/MAC Global Solar Index ETF (NYSE: TAN) is down 65% since its peak in May), Hapoalim believes that "company specific fundamentals have not yet been reset to reflect..." the current environment. Moreover, the firm feels that valuing "stocks based on traditional P/E metrics alone is irresponsible" and notes that "forward earnings potential provides the best tool for screening stocks."
Given the slide in solar stocks over the past few months, Hapoalim anticipates short-covering to create a near-term rebound, but believes that this will only create an opportunity for short-sellers to reload.
The solar sector is seeing substantial downside with the majority of the stock market today:
- First Solar (Nasdaq: FSLR) down 4%
- Suntech (NYSE: STP) down 12.5%
- SunPower (Nasdaq: SPWRA) down 7.6%
- Canadian Solar (Nasdaq: CSIQ) down 7%
- Evergreen Solar (Nasdaq: ESLR) down 7.9%
- LDK Solar (NYSE: LDK) down 6.3%
- Yingli Green Energy (NYSE: YGE) down 10.7%
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This Article should be called
Brad on Oct 11, 2008 05:24 PMThere's Lies.. Damned Lies and then there's Hapoalim Securities. It's quite obvious that the Street Insider is nothing more than a media outlet for Shorts to bash stocks while at the same time executing Bear Raids on those companies.