Sector Snap: Solar companies upgraded
NEW YORK (AP) — A Raymond James analyst on Wednesday upgraded a handful of solar companies, saying that investing in them isn't as risky as it used to be.
Pavel Molchanov boosted his ratings for First Solar Inc., SunPower Corp., Suntech Power Holdings Co. and Trina Solar Ltd. to "Market Perform" from "Underperform," noting that the shares of all four companies are down at least 13 percent from 52-week highs set earlier this year.
"After the initial high-yield rally, we view the recent weakness in these and other commodity solar stocks as a sign of a return to more rational trading," Molchanov wrote in a note to investors.
The overall solar industry has struggled in recent years due to a steep drop in solar panel prices. Global demand for panels languished in Europe and elsewhere, while at the same time manufacturing capacity soared.
Molchanov said the recent drop in share prices partially reflects weak fourth-quarter results and outlooks released by the companies so far, although Suntech has yet to release its results.
The analyst added that he thinks the downside for the stocks is much more limited than it was a year ago, given that their shares have underperformed the overall market for the past four years and that short-term investment interest in them remains high.
In addition, Molchanov said he expects module pricing to remain stable for the next several quarters, or possibly even increase slightly, which could allow for some improved profits.
"To be clear, such a recovery is something that we (and, we think, most other analysts) are already modeling, but we don't rule out a more positive effect on share prices than might be warranted by the actual numbers," Molchanov said.
In afternoon trading, First Solar shares rose $1.24, or 4.9 percent, to $26.34; SunPower added 27 cents, or 2 percent, to $12.28; Suntech shed a penny to $1.20; and Trina added 4 cents to reach $4.19.