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Piper Jaffray Upgrades CSIQ, SPWR, Downgrades TSL, YGE, JASO to Neutral, LDK to Underweight

July 12, 2012 9:50 AM EDT Send to a Friend
Get Alerts CSIQ Hot Sheet
Price: $39.19 -1.31%

Rating Summary:
    12 Buy, 6 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 24 | New: 21
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Stocks in the Solar sector are mixed Thursday morning after Piper Jaffray's Ahmar Zaman revised a number of recommendations within the sector. Leading the group higher are Canadian Solar (Nasdaq: CSIQ) shares, up more than 4.5 percent at last check. Shares of LDK (NYSE: LDK) have fallen the most this morning, currently down almost 5 percent.

Upgrades:
  • Canadian Solar - from Neutral to Overweight, price target raised from $2.70 to $5. Zaman is confident in the company's project business and expects to see "the first signs of successful execution" within the project pipeline during the second quarter of this year. Sees projects pushing gross margins into the mid-teens next year.
  • SunPower (Nasdaq: SPWR) - from Neutral to Overweight, $6.50 target maintained. The analyst is attracted to possible growth in the US's residential rooftop market and sees SunPower continuing to gain market share in this segment.
Downgrades:
  • LDK Solar - from Neutral to Underweight, target reduced from $2.50 to just $1. Pointed to "an overburdened balance sheet" and profitability concerns. Zaman's current model has LDK's gross margins in negative territory throughout fiscal 2013. The analyst, then, is looking for a massive annual loss of $5.47 per share.
  • Trina Solar (NYSE: TSL) - from Overweight to Neutral, target cut from $6.60 to $6. Said price erosion will continue to put pressure on margins and create a cloudy outlook for profitability. "We are positive on TSL's geographical diversification and cost reduction efforts, but remain cautious on near term industry oversupply and end-market volatility," according to Zaman.
  • Yingli (NYSE: YGE) - from Overweight to Neutral, target reduced from $4 to $3. Each of the analyst's downgrades were related to "reset expectations for lower pricing along the solar value chain." Yingli will also be impacted by "near-term industry oversupply and end market volatility, especially from Europe."
  • JA Solar (Nasdaq: JASO) - from Overweight to Neutral, target moved from $1.35 to $1. Zaman sees JA Solar's earnings swinging into negative territory until the end of 2013. Lower average selling prices will keep gross margins in the single digits next year, "before cost improvements allow for margin recovery into the mid-teens" by the end of next year.
Just minutes after the opening bell, the Claymore/MAC Global Solar ETF (NYSE: TAN) is down 1.7 percent at last check.

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