July 12 (Bloomberg) -- Renewable Energy Corp ASA fell the most on the Oslo stock exchange’s OBX index as Nordea Markets advised investors to sell shares in the solar-product maker, saying a recent rally was overdone.
Shares in REC, based in Sandvika near Oslo, fell as much as 3.1 percent to 2.656 kroner and traded 1.2 percent lower at 11:53 a.m. That makes REC the biggest loser on the OBX index of 25 most-traded stocks.
The shares have more than doubled since the start of the year, boosted by a recovery in the market for solar panels and after the company announced a refinancing that alleviated investor concerns about its debt. The rally reflects inflated expectations for a solar market that remains oversupplied, Nordea analyst Andre Holo Adolfsen said in an e-mail today.
REC’s share price is based on “a polysilicon price north of $25 per kilo for 2014 and on, which we consider highly unlikely given the massive oversupply and the dynamics of the solar industry,” Adolfsen said.
The company, like European peers Solarworld AG and Q-Cells SE, has been under pressure from Chinese rivals that expanded capacity just as demand slowed, causing solar-wafer and cell prices to plunge.
Based on market fundamentals, Nordea finds the REC share overvalued, and when adding in political and financial risk, “the share looks unattractive,” Adolfsen said. “We reiterate our strong sell rating.”
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