BNEF: Solar stock prices on road to recovery

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Solar stock prices could have begun a longer term recovery, according to Bloomberg New Energy Finance (BNEF).

A combination of stabilising prices and maturing supply chains has aided some of the sector’s big hitters with share values climbing.

“Although prices have recovered across the [low carbon] technology board, it is solar that has been the lead sector, at least for the last eight months,” wrote Angus McCrone, BNEF editor.

“One of the biggest concerns for public market investors over the past few years has been margin erosion in the PV and wind supply chains. The period 2009-12 saw a vicious squeeze on costs as excess manufacturing capacity collided with demand that was growing much less rapidly,” he said.

“Now we are seeing prices starting to stabilise, amid signs that high-cost and low-quality manufacturing capacity is being shuttered. Some PV makers have closed whole factories, others have gone out of business.

“Also helping solar stocks in general this spring were ABB’s purchase of solar inverter maker Power-One in late April for $748.5 million, hopes that the US Congress would extend Master Limited Partnership structures to solar projects, and the performance of new listing SolarCity, the US installer and financier, which has now seen its shares rise fivefold since its initial public offering on 12 December last year,” added McCrone.

Analysts at other investment firms appear to have more mixed thoughts on the industry.

Credit Suisse said last week that many solar companies are currently over-valued but did not go as far as to issue wholesale ‘sell’ guidance.

UBS meanwhile lifted its price target for shares in First Solar from US$40 to US$51, a sign that it expects it to hold its current value. Shares in the company closed at US$48.48 on Tuesday 30 July, up almost 2.5%.

SunPower closed up 7.42% for the day, Trina Solar was up 1.22% and Canadian Solar up 3.16%.

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