Analysts Pick 2009's Solar Winners: Suntech

Written by Ucilia Wang

A weeklong gathering of solar companies in Spain ended Friday [Sept. 5] with predictions of a tough year ahead.

Solar companies announced deal after deal to impress investors as 715 companies and more than 20,000 attendees gathered at the European Photovoltaic Solar Energy Conference in Spain.

But falling crude oil prices -- a result of weak demand -- and predictions of a difficult year for the solar industry in 2009 likely dampened investors' enthusiasm.

Solar stock prices slipped during most of the conference.

Share prices of major players, such as SunPower (SPWR Quote), Suntech Power (STP Quote), First Solar (FSLR Quote) and Trina Solar (TSL Quote), headed south for most of the week before rebounding on Friday [Sept. 5].

LDK Solar (LDK Quote) saw its shares open at $50.51 per share on Tuesday [Sept. 2] and closed at $45.15 per share on Friday [Sept. 5], despite announcing contracts to sell its silicon wafers and buy equipment to equip new manufacturing plants.

Shares of First Solar opened at $270.40 per share on Tuesday [Sept. 2] and closed at $236.01 per share on Friday [Sept. 5].

After meeting with key industry players at the European Photovoltaic Solar Energy Conference in Spain, analysts said shifting government policies, a potential oversupply of silicon and hype about the next hot markets will converge in 2009 to weed out weak companies.

"The year 2009 could start to show signs of bifurcation between long-term winners and the companies with a 'me-too' strategy in the solar sector," wrote Lazard Capital Markets analyst Sanjay Shrestha of Lazard Capital Markets in a research note Friday [Sept. 5].

Solar company executives and analysts have predicted a drop of anywhere from 5 percent to more than 20 percent in solar panel prices next year. During the conference, SunPower CEO Thomas Werner told Reuters that panel prices will likely fall between 10 percent to 20 percent in 2009.

Jeff Osborne, an analyst at Thomas Weisel Parners, has already aired his pick of winners.

"We see Suntech (high volume, low cost), SunPower (high performance and vertical integration), and First Solar (low cost, high volume) weathering the storm well," Osborne wrote in a research note.