Barrons interviewed Aaron Chew of Hapoalim Securities and discussed the solar industry.  Here are some highlights.

– Highlights the significant incentive cuts across Europe which will slow demand. 

– Sees big growth in solar in Italy (23%), US (45%) and China (100%) for next year, but declining or flat growth in key markets such as Germany. 

– Tight supply should be begin loosening up

– Sales pricing should decline 18 – 24%

– More difficult to achieve manufacturing efficiencies and poly prices shouldn’t drop much further, so production costs won’t improve much and could rise

– Most cautious on Suntech Power (STP) and First Solar (FSLR).  Has just a $6 price target on STP.  Says First Solar (FSLR) no longer deserves a premium valuation because their competitive advantage is diminishing, delays in utility projects are expected and utility customers may not be willing to pay up as much as Wall St believes. 

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– On Yingli (YGE): EPS drops from .72 this year to .55 next year.  Has concerns about cash flow and spending.  Price target is $8 which is 30% lower than the current price and down around the lows of the year.

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– Cautiously optimistic on Sunpower (SPWRA) and Trina Solar (TSL).  Trina has the most attractive cost structure in the industry, but more attractive on a pull back.  Sunpower isn’t quite a Buy, but exposed in the right markets.. has exposure in Italy with Sunray purchase and little exposure in Germany.  Believes company will surprise to the upside when they issue 2011 guidance.

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