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Wells Fargo Upgrades Yingli (YGE) to Outperform, Cuts Solarfun (SOLF), Canadian Solar (CSIQ) to Market Perform, JA Solar (JASO) to Underperform

December 3, 2010 9:06 AM EST Send to a Friend
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    5 Buy, 17 Hold, 4 Sell

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An analyst at Wells Fargo this morning revised investment ratings on a number of stocks in the Solar sector, citing foreign exchange and tough weather in Europe. The firm said it favors "integrated manufacturers which we view as more defensive given sector headwinds."

Wells Fargo made the following rating changes:
  • upgraded Yingli Green Energy (NYSE: YGE) from Market Perform to Outperform, $12-$13 valuation range. The firm likes Yingli's low production costs; sees the company manufacturing a panel for below $1.20/watt during Q1 of next year and for $1-$1.10/watt for the rest of '11. As Wells Fargo does not expect any other competitors (besides Trina Solar (NYSE: TSL)) to meet Yingli's price point, the company should gain share over next year.
  • downgraded Solarfun Power (Nasdaq: SOLF) from Outperform to Market Perform, $8.50-$10 valuation range. The firm said challenges for both Solarfun and Canadian Solar will be "balancing revenue growth with profitability if Euro decline continues." Wells Fargo says that Solarfun's numbers look achievable, however margin levels are currently "in-flux."
  • downgraded Canadian Solar (Nasdaq: CSIQ) from Outperform to Market Perform, $13-$15 valuation range. The firm believes that Canadian Solar has "too much earnings leverage." Wells Fargo estimates that for every 1% change in average selling prices, nearly 30c impact its model.
  • downgraded JA Solar (Nasdaq: JASO) from Market Perform to Underperform, $4-$5 valuation range. The firm says that there are no easy ways out for the cell manufacturers. Despite running at full utilization, according to channel checks, cell manufacturers pricing has "started to decline from peak levels of $1.40-$1.45/watt in Q3 and are now in the $1.35-$1.40/watt range."
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