Clouds Rolling Over Solar Stocks as Barclays Cuts Sector to Neutral (JASO, STP, TSL, more)

August 13, 2009 2:33 PM EDT

Analysts at Barclays put out a very bearish note on solar stocks today, downgrading the sector from Positive to Neutral. The sector downgrade comes amid earnings reports from numerous solar companies this week, many from China-based manufacturers.

The firm believes that prices for solar panels will continue to fall as demand in both the U.S. and China "won't grow fast enough to offset increasing supply". Moreover, Barclays sees new capacity likely exceeding incoming, new demand, possibly "exacerbating the oversupply problem". If solar production does not slow rapidly, as Barclays says, this oversupply issue could persist through even 2010.

Inline with its waning bullish sector sentiment today, Barclays also downgraded shares of JA Solar (Nasdaq: JASO) (which reported Q2 results yesterday) and cut estimates on Suntech (NYSE: STP), Trina Solar (NYSE: TSL), Yingli (NYSE: YGE) and ReneSola (NYSE: SOL).

The firm moved its investment rating on JA from Overweight to Equalweight, its price target on Suntech from $16 to $15, on ReneSola from $5.60 to $4.50 and its target on Yingli from $16.50 to $16.

Around the sector:

• JA Solar - down 7.6%
  
• LDK Solar (NYSE: LDK) - down 20% (reported Q2 earnings last night, also guiding below the Street.)
  
• Applied Materials (Nasdaq: AMAT) - up 0.5% (quarterly results yesterday before the market opened.)
  
• Gushan (NYSE: GU) - down 5% (reported a Q2 loss yesterday morning.)
  
• ReneSola - up 1% (reported better-than-expected earnings yesterday.)
  
• Trina Solar - down 9.5%
  
• First Solar (Nasdaq: FSLR) - down 0.5%
  
• Yingli Green - down 8.8%
  
• Suntech - down 6.5%

Also, check out the Claymore/MAC Global Solar Index (NYSE: TAN), a solar ETF which is often helpful in measuring broad performance for the sector. The TAN is down about 4% today, showing weakness across the board.

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