The sun is setting on solar energy companies, at least if you ask J.P.Morgan, which has downgraded several businesses in the sector.<\/p>\n
Christopher Blansett, analyst with J.P.Morgan, said in a note to clients Tuesday that demand for solar installations around the world will decline in the second half of 2010.<\/p>\n
"Our updated global solar demand model calls for about 7.5 gigawatts of installations in 2010 with our work suggesting 4.5GW of this coming in the first half of the year … As solar stocks have historically traded in-line with volume demand, we view this as a particularly negative indicator for the group," he said.<\/p>\n
He also warned that companies were aggressively expanding capacity to chase market share, which could lead to an oversupply of as much as 3-4GW.<\/p>\n
Instead, Mr. Blansett recommends long investors look into LED and wind sectors, which have "better underlying fundamentals" over the next year.<\/p>\n
After reviewing the sector, Mr. Blansett has downgraded First Solar Inc.<\/a> and Energy Conversion Devices Inc.<\/a> to Underweight from Neutral, and Evergreen Solar Inc<\/a>. to Neutral from Overweight.<\/p>\n He's also slashed the price target for<\/a> First Solar to US$85 from US$140, Energy Conversion Devices to US$6 from US$15, and withdrawn the US$5 target for Evergreen without posting a replacement figure.<\/p>\n Mr. Blansett maintains a Neutral rating on Ascent Solar Technologies<\/a> (to US$5 from US$9.50), an Underweight on MEMC Electronics Materials<\/a> (US$12), and an Overweight on Applied Materials, Inc.<\/a> ($16). <\/p>\n