Several Wall Street Firms Comment on Recent Rally in Solar Stocks‏

Several Wall Street firms are out with comments on the recent rally in the Solar sector

Just in the past week (5-day chart), shares of LDK Solar (NYSE: LDK), Yingli (NYSE: YGE), Trina Solar (NYSE: TSL), ReneSola (NYSE: SOL), Jinko (NYSE: JKS), JA Solar (Nasdaq: JASO), SunPower (Nasdaq: SPWR) and First Solar (Nasdaq: FSLR) have popped between 15-40%. Although, looking at a 1-year chart, most are down 35-75%.

A Morgan Stanley (NYSE: MS) analyst felt the recent rally was driven by short covering and says risk to the downside remains as talk of hard caps in European countries (U.K., Italy and German) still exist. The analyst also thinks there is a growing opportunity in China (above 4GW) for 2012. In all, Morgan Stanley remains cautious on the industry and bearish on Power-One (Nasdaq: PWER).

Maxim Group is relatively in the same boat, seeing continued risk to Suntech (NYSE: STP) and Trina Solar (NYSE: TSL). The analyst thinks the rally will be short-lived and expects forecast cuts in February.

Ticonderoga also agrees, seeing increased competition which will put pressure on pricing and margins through 2012. Adding to that, the analyst felt current manufacturing capacity is around two times the level of current installations.

Deutsche Bank was the most positive...saying the solar industry's surprisingly strong Q4 in Germany and robust demand in the U.S. and Italy could help the sector in the near term.

NOTE - Guggenheim Solar ETF (NYSE: TAN)

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