Needham Updates Solar Stock Ratings (FSLR, SPWRA, SOLF, STP, JASO)

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09:11:44 am on June 7, 2010

Needham & Company has come out with updates on their ratings of several solar stocks.  Hat tip to Street Insider for the analyst comments:

Initiated coverage on First Solar (FSLR) with an Underperform and $92 price target.
“As the world’s largest producer of solar panels with the best cost structure, First Solar is benefiting from strong near-term demand and a growing pipeline of utility scale solar projects. However, we are concerned that margins will deteriorate further in 2H10 and 2011, and we believe stocks of companies with falling margins typically under perform the market. Additionally, we believe the bulls are overestimating the upside tied to First Solar’s North America solar project pipeline, and underestimating the downside risks in Germany and other European countries. We see downside risk to current consensus estimates and expect projected earnings to decline in 2011. Given that FSLR shares are trading at a rich multiple of 17X 2011 P/E and at a 42% premium over peers’ average, we recommend investors use the recent rebound to sell their positions.”

===>   Click Here For Your FREE First Solar Technical Analysis

Initiated coverage on Solarfun Power (SOLF) with a Buy rating and $9 price target.
“As the leader in OEM solar module business, we believe SOLF could see above average growth as high-cost producers in Europe increasingly use lower cost OEM modules to reduce costs. We believe the new management team has done a good job strategically focusing the company on its OEM module business and improving operations to lower costs. Long-term, we believe SOLF could become an attractive acquisition target for a large contract manufacturer wanting to enter the solar production business. While its high exposure to Germany is a risk given the expected FIT cuts in 2H10 and 1H11, we see upside to full year shipment guidance as the company expands into additional markets. We recommend investors buy SOLF as a more defensible play in the volatile solar sector.”

===>   Click Here For Your FREE Solarfun Technical Analysis

Initiated coverage on Suntech Power (STP) with a Hold rating.
“As the world’s largest producer of crystalline solar cells/modules, we believe Suntech has the most bankable Chinese brand, enabling the company to charge a price premium over competitive Chinese brands. While Suntech started earlier than its competition on the development of high-efficiency solar cells, delays continue to limit the contribution from its promising Pluto technology. We believe Suntech’s cost per watt will remain higher than the leading Chinese producers, especially given the near-term tightness in wafer supply. Furthermore, the near-term overhang of the Euro is having a large impact to earnings given its sizable currency exposure. With the shares trading at a premium over peers, we suggest investors wait for a clear catalyst, such as margin expansion or a successful ramp of Pluto, before getting aggressive.”

===>   Click Here For Your FREE Suntech Power Analysis

Downgrades SunPower (SPWRA) from Buy to Hold.
“We are downgrading SunPower to Hold due to increased downside risk to estimates and currency headwinds. We see increased risk surrounding SunPower’s expanded European pipeline of systems business due to the possibility of additional subsidy cuts, currency headwinds and growing macro concerns in Europe. Furthermore, SunPower continues to face pricing pressure despite strong near-term demand. With a lack of near term catalysts, we expect SPWRA shares to remain range bound. Therefore, we recommend investors wait on the sideline at this time.”

===>   Click Here For Your FREE Sunpower Analysis

Maitains Hold on JA Solar (JASO), but lowers price target from $8 to $6.50.
“We have lowered our 2010 revenue/GAAP EPS estimates to $1.10 billion/$0.70, and our 2011 estimates to $1.14 billion/ $0.65, reflecting our more moderate sector view. We are lowering our target price from $8 to $6.50, which is based on 10 2011 P/E or 0.9X 2011 EV/S.”

===>   Click Here For Your FREE JA Solar Analysis

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