Small Solar Companies May Experience Hard Landing (SOLR, AMAT, FSLR, SPWRA, JKS, YGE)
Solar companies could be in for a bumpy ride over the next couple of years according to Solarbuzz in a research report. The firm said that spending for crystalline silicon, which is the key material in manufacturing of photovoltaic solar panels used to turn sunlight directly into electricity, and thin-film products could fall by 47% to $7.6 billion in 2012 from $14.2 billion this year, according to Reuters. The research report said that there is now an oversupply of solar panels in the market after aggressive expansion by solar companies in 2010 and 2011. The news appears to be weighing on the Solar Stocks Index, which is falling by 3.6%.
Solarbuzz sees a shakeout of the market as smaller solar companies will only account for 30% of the market by 2015. The firm said that going forward market leading firms such as GT Solar International (SOLR) and Applied Materials (AMAT) will be able to meet demand for the products.
Also chiming in on the oversupply issue is R.W. Baird. The firm said that First Solar (FSLR) is well prepared to weather the oversupply storm and will be able to maintain its cost leadership position. The stock maintained its outperform rating and $185 price target. Not so fortunate was SunPower (SPWRA), which was downgraded to neutral from outperform at R.W. Baird.
Investors can track the Solar Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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