Analysts Continue Negative Outlook On Solar Energy Sector

Despite the solar stocks being pummeled into oblivion for the entire year and accelerating those losses in the past few weeks, analysts continue with the negative outlooks and sell ratings.  Let’s keep in mind though that analysts are almost always late to the party and that may be the case in this situation as well.  With solar stocks being the biggest beneficiary of the extension of tax credits in the recent bailout bill and the likelihood of an Obama presidency, we may be near a bottom despite big concerns over solar projects getting funded due to credit concerns. 

Let’s review the calls of the past few days:

Suntech Power (STP) was hit with a Sell rating on Thursday.

In addition to the sell rating on STP, Hapoalim Securities also initiated coverage on the entire sector with an underperform rating, saying the sector could drop another 30 – 40% from current levels based on the impact of the credit crisis which the firm doesn’t believe the market has fully priced in. The average solar project is 50 – 70% debt financed. 

This morning, Collins Stewart lowered First Solar’s price target from $330 to $220.. Good guys, you’re only about 2 months late with the stock plunging nearly 200 points during that time.  They are also reducing revenue and profit estimates due to the declining Euro and credit crisis.  With all that said, they are recommending adding shares down here.  Now that’s a call I can get behind. 

Technically, solar is deeply oversold down here and looks poised for a major rally in the coming weeks, but I’d be looking to take profits on any major rally until uncertainties over the presidential race and the credit crisis play out.

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