Solar: Downgraded

Written By Brianna Panzica

Posted September 14, 2011

Solar companies have been facing hard times as several European countries remain in heavy debt.  Companies have been cutting costs, and several, including Evergreen Solar, have filed for bankruptcy.

Today, Jefferies Group (NYSE: JEF) analysts cut the outlook for three Chinese solar companies, an action that emphasizes the trouble solar companies are facing and that this trouble isn’t nearing its end.

Jefferies analyst Jesse Pichel downgraded Trina Solar Ltd (NYSE: TSL) from “buy” to “hold”, lowering the price target to $10 from $21 per share, reported CNBC.

Suntech Power (NYSE: STP) was moved to “underperform” from “hold”, and the outlook was lowered to $3 from $6.

And JA Solar (NASDAQ: JASO) also fell yet again, downgraded to “underperform” from “hold” and receiving a price outlook of $2 per share, down from $4, reported CNBC.

Pichel commented on his reason for these downgrades and the market conditions that led to this, saying, “While demand is modestly improving, demand elasticity is not occurring and prices remain adrift.” 

European economic conditions lend largely to this fall in solar prices.  The continent accounts for 65% to 70% of solar orders, says Forbes, and the weakened euro has hurt the prices. 

Pichel noted that bank approval for solar loans is slowing, as CNBC reports, due largely to suffering economic conditions. 

And people just aren’t buying solar panels.  Even though prices are down, customers know the decline has not ceased and are waiting on even lower prices. 

Companies like Trina Solar have been pushing prices down in hopes that having the lowest prices will ultimately bring in the most demand.  So far, however, this has just hurt their profit margin. 

At noon today, Trina Solar was down 3.6% to $9.88.  Suntech Power fell 7% to $3.81. And JA Solar dropped 8.3% to $2.46 per share. 

That’s all for now,


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