Solar stocks rose on anticipation that lower-than-expected subsidy cuts in Germany will spur demand while an oversupply of panels may lead to consolidation.
Suntech Power Holdings Co. (STP), the biggest solar-panel maker, gained 8.5 percent to $3.21 at the close in New York yesterday and First Solar Inc. (FSLR), the biggest thin-film solar company, has jumped 18.5 percent this year. They helped boost the Bloomberg Global Leaders Solar Index (BLGS) of 37 companies to a 13 percent increase this year, rising on all but four trading days.
Near-term fundamentals for the industry may improve, which “could in turn drive a turn in investor sentiment and drive solar stocks higher,” Vishal Shah, a Deutsche Bank AG analyst in New York, said yesterday in a research note.
Anticipated cuts to subsidies in Germany, the world’s top solar market, may be lower than expected and may trigger a rush to install projects before new rates kick in, boosting shares in panel makers, he said. Shah rates both First Solar and Suntech as “hold.”
The market is rising on optimism that demand will surge this year in China and “a hope that the worst is behind the solar industry,” Ramesh Misra, a Brigantine Advisors LLC analyst in New York, said in an interview. Chinese officials said Jan. 10 that the country may double the amount of solar capacity in operation there by installing 3 gigawatts this year.
“The second quarter is when we probably get a better picture of what 2012 is likely to shape up to be and we’ll have a better view of where shipment levels will be,” said Misra, who rates First Solar “buy” and Suntech “hold.”
New Solar Markets
With prices falling for manufacturing equipment, new markets may emerge in Asia, the Americas and developing countries, Bloomberg Industries said in its 2012 outlook.
A global oversupply of panels, which drove down prices last year, will persist in 2012 and lead to consolidation, Bloomberg Industries said.
The rally may not last, with some analysts predicting a gloomy year. “I think 2012 is going to be as bad as the second half of 2011 for the solar sector -- massive overcapacity, lousy pricing and non-existent margins,” Paul Leming, a Ticonderoga Securities analyst in New York, said in an e-mail. He rates First Solar a “sell” and Suntech “neutral.”
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