Goldman Sachs analyst Michael Molnar has had a change of heart on his rosy outlook for both Sunpower (SPWR) and First Solar (FSLR), slapping both with Sell ratings this morning, down from previous Buy ratings due to oversupply issues and a lack of European subsidies. 

“The risk of oversupply in the solar market will soon become a reality as considerably less generous demand subsidies take hold just as a wave of supply and tight financing hit the market,” Molnar wrote in a client note. “We believe that liberal subsidies of the past in markets like Germany and Spain are unlikely to be replicated in the future given fears of their ultimate cost in a bad world economy.”

“We strongly believe that SunPower and First Solar are two of the best solar companies in the world and that both will be part of the growing solar industry for years to come,” Molnar wrote. “However, in our view, even these companies will face headwinds in a market that is oversupplied with modules.”

Both companies are getting hit hard in the premarket with Sunpower (SPWRA) down more than 11% and First Solar (FSLR) down more than 15%.  Solar should have yet another tough day ahead.