Filed under: Energy, Earnings, Infrastructure, Global Economy
The never-ending quest to produce energy from something other than fossil fuels has provided Wall St. firms and investors the challenge of constantly trying to determine which companies are legitimate. After years of boom and bust cycles, the solar sector has finally purged some of the industry excess and may be poised to become relevant again. That is the take of Citigroup Inc. (NYSE: C) in a fresh research call. The proverbial Wall St. question will emerge, “Is it different this time?”
Citigroup is launching an ambitious global solar sector research team that will have analysts in the United States, Europe and Asia. While the near-term picture for the industry and the sector remains price driven and very volatile, in the longer term the analysts see every reason to remain positive. The sector will continue to exhibit growth, driven by underlying economics and fuel diversity, with legislatively driven spending still present but taking more of a back seat.
The solar research team at Citigroup started four solar stocks with Buy ratings, two at Neutral and one with a dubious Sell rating. We are seeing real gains on this on the select names. The stocks started with Buy ratings are:
Sunpower Corp. (NASDAQ: SPWR) is not only their top-rated stock but it is added to the U.S. High Conviction Buy list (top picks live). The target price is $12, though the consensus Wall St. estimate is only $5.50, which is less than current trading levels. Sunpower is up almost 5% today at $8.40.
MEMC Electronic Materials Inc. (NYSE: WFR), a former high flyer, has a price target at Citigroup of $5.40. The consensus estimate is at $4.00. Surprisingly, this battered solar (and chip) wafer-maker is up only 1%.
First Solar Inc. (NASDAQ: FSLR) is yet another former high flying solar stock, and the Citigroup price target is $41, while the Thomson/First call estimate is at $24.00. Shares are up more than 4% and back above $30 so far.
Advanced Energy Industries Inc. (NASDAQ: AEIS) was given a price target of $20, and that is substantially higher than the consensus of $13.50. This one is up almost 4.5% at $16.60 on the news.
Citigroup rates Trina Solar Ltd. (NYSE: TSL) and Yingli Green Energy Holding Co. Ltd (NYSE: YGE) at Neutral.
Suntech Power Holdings Co. Ltd. (NYSE: STP) was initiated with the Sell rating. Its shares are getting hit with a drop of more than 3% to $1.53 so far today.
One of the main thesis points for the Citigroup team is that while solar may have reached socket parity in many global regions at the residential level (socket parity refers to solar panels offering cheaper electricity than power from the grid), utility scale parity is expected to advance over the next few years. Besides pure economics, the need for utilities to diversify their fuel mix is crucial to insulating them from volatility and the likely upward movement in gas prices over the longer term, a need that was well-documented as they surveyed …read more
Source: FULL ARTICLE at DailyFinance