Energy Conversion's Warning Could Just Be the Tip of the Iceberg - Credit Suisse (FSLR) (SPWRA) (STP) (YGE)
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Rating Summary:
0 Buy, 1 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Analysts a Credit Suisse commented on the implications in the solar sector following the negative pre-announcement from Energy Conversion Devices (Nasdaq: ENER), a relatively small company in the sector.
Energy Conversion, a producer of ~30MW/quarter of shipments, said that the dramatic and abrupt shift in the French and Italian solar incentive structures may impact this quarters revenue by as much as 50% as financing sources put projects on hold.
Credit Suisse doesn't think the incident is not isolated, and said "there could well be more negative preannouncements to come from other companies."
The firm said policy in Italy, France and eventually in Germany in the 2nd-half of this year "will continue to evolve in a way that significantly reduces the run rate of shipments." This comes as a supply is growing sharply. Poly prices will fall at a slower pace than panels, the firm believes.
Stock prices could correct 25% to 1x replacement value off CY11 capacity estimates; and ~50% to 1x replacement value off CY10 capacity estimates, the firm warns.
Credit Suisse said First Solar (Nasdaq: FSLR) has the most downside "given it is trading at the highest enterprise value EV/replacement value metric." However, the company's pipeline may protect it for now.
Others impacted would be SunPower Corporation (Nasdaq: SPWRA) and Suntech Power Holdings Co. Ltd. (NYSE: STP), then Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) and Trina Solar Ltd. (NYSE: TSL), then JA Solar Holdings Co., Ltd. (Nasdaq: JASO), JinkoSolar Holding Co., Ltd. (NYSE: JKS) and ReneSola Ltd. (NYSE: SOL).
Energy Conversion, a producer of ~30MW/quarter of shipments, said that the dramatic and abrupt shift in the French and Italian solar incentive structures may impact this quarters revenue by as much as 50% as financing sources put projects on hold.
Credit Suisse doesn't think the incident is not isolated, and said "there could well be more negative preannouncements to come from other companies."
The firm said policy in Italy, France and eventually in Germany in the 2nd-half of this year "will continue to evolve in a way that significantly reduces the run rate of shipments." This comes as a supply is growing sharply. Poly prices will fall at a slower pace than panels, the firm believes.
Stock prices could correct 25% to 1x replacement value off CY11 capacity estimates; and ~50% to 1x replacement value off CY10 capacity estimates, the firm warns.
Credit Suisse said First Solar (Nasdaq: FSLR) has the most downside "given it is trading at the highest enterprise value EV/replacement value metric." However, the company's pipeline may protect it for now.
Others impacted would be SunPower Corporation (Nasdaq: SPWRA) and Suntech Power Holdings Co. Ltd. (NYSE: STP), then Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) and Trina Solar Ltd. (NYSE: TSL), then JA Solar Holdings Co., Ltd. (Nasdaq: JASO), JinkoSolar Holding Co., Ltd. (NYSE: JKS) and ReneSola Ltd. (NYSE: SOL).
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