UPDATE: Axiom Turns Bullish on Solar and Raises Yingli (YGE), Trina (TSL), and JA Solar ( JASO) to Buy (SCTY)
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(Updated - October 6, 2016 9:12 AM EDT)
Axiom Capital upgraded Yingli Green Energy (NYSE: YGE), Trina Solar (NYSE: TSL), and JA Solar Holdings (NASDAQ: JASO) from Sell to Buy. Price targets were raised to $5.40, $15, and $10, respectively. SolarCity (NASDAQ: SCTY) was raised to Hold.
Analyst Gordon L. Johnson II highlighted catalysts from China demand, revitalized investor interest, the U.S. election, and valuation.
Johnson explained, "The impetus for our new-found solar optimism rests with 4 key themes, including: (1) China’s proposed Jul. 1, 2017 FiT cut, which we estimate will usher in ~25GW of 1H17 Chinese “pull-in” demand (the 6.8% China FiT cut Jul. 1, 2016 caused ~20GW of demand pull-in – link), suggesting, when including ~34GW of ROW demand, 70.5GW of modules produced in ’17, & ~5.7GW of excess inventory, the solar mkt, temporarily (i.e., in 1H17), will be defined by undersupply (pushing prices across all solar substrates higher), (2) after seeing 32/18 straight weeks of week-overweek (“w/w”) multi-wafer/multi-cell price declines, respectively, where just two weeks ago wafer prices fell 4.7% w/w (or 91.8% annualized), prices for both of these substrates moved higher this week – on the heels of news of a much sharper than expected ’17 FiT cut planned in China (link) – implying the “fruits” of demand pull-in have already begun to bloom in the far east (& also signifying solar prices have bottomed)."
The analsyt continued, "(3) the fact that 2013-2015, over the Dec.-Mar. timeframe, the Solar TAN Index has avg.’d a 19.9% return, due, we blv, to a nonfundamental sentiment tailwind sparking clean energy investors’ “animal spirits” – pushing clean energy funds to “refocus” on solar stocks – which we blv a poss. H. Clinton Presidential election win would serve as this yr given her robust 140GW solar installation goal (link), even if unachievable, & (4) the fact that the Solar TAN Index has materially underperformed the mkt this yr, falling 32.5% YTD vs. +5.7% for the S&P 500. In short we see catalysts of both the fundamental & sentiment variety on the horizon, implying the time to BUY is now."
Shares of Yingli Green Energy closed at $3.89 yesterday.
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