Solar power faces demand risk, according to Goldman Sachs, as the supply is not reduced and, therefore, the average selling price is down. Analysts Brian Lee, Hank Elder and Candace Dechant do not see a turnaround of fortunes for the sector. Furthermore, prolonged cyclical pressure is expected to percolate into next year; it is too early to get into positive.
As a result, the brokerage maintains its Neutral rating on the American solar sector. As far as stock specifics, the analysts picked up First Solar, Inc. (NASDAQ: FSLR) and 8Point3 Energy Partners LP (NASDAQ: CAFD) as the lone buys in the segment. The comments come on the back of investor meetings earlier this week.
Related Link: Solar Might Be In For An Even More Challenging 2017
Sector Rating Justifications
Goldman pointed out that its checks indicated residential volumes are recording a growth pace of 20–40 percent on a year-over-year basis driven by sales friction caused by the ambiguity in "time-of-use rates (TOU) in CA abating" in the second half of the current year. The companies expect TOU to settle down by the middle or late 2017. The key factor is that there was no talk of growth for 2017 in the conference.
"In US commercial, install rates appear to be holding up for now, although our separate channel checks suggest ITC extension could lead to some delays in timing – similar to issues in utility-scale that have been widely publicized of late," the analysts told clients in a research note.
The brokerage thinks that customers expect better pricing even as installers indicated that hardware costs might drop down by $0.20–$0.30 per watt by the middle of next year.
At Time Of Writing ...
- 8Point3 was down 3.64 percent at $14.81.
- First Solar was down 3.78 percent at $35.04.
- JinkoSolar Holding Co., Ltd. (NYSE: JKS) was down 7.71 percent at $15.44.
- Solaredge Technologies Inc (NASDAQ: SEDG) was down 8.11 percent at $15.52.
- Sunrun Inc (NASDAQ: RUN) was down 2.30 percent at $5.53.
- Vivint Solar Inc (NYSE: VSLR) was up 1.34 percent at $3.02.
- Yingli Green Energy Holding Co Ltd (ADR) (NYSE: YGE) was down 3.01 percent at $3.55.
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Latest Ratings for CAFD
|Jul 2016||JP Morgan||Upgrades||Neutral||Overweight|
|Jun 2016||Wells Fargo||Initiates Coverage on||Outperform|
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