Ahead Of The Bell: Solar Stocks Pressured By Price

NEW YORK (AP) — Solar panel prices and demand for solar modules will likely decline in the coming quarters, which will lead to a slowdown in production capacity and the overall solar industry said an analyst on Tuesday.

Credit Suisse analyst Satya Kumar said he expects panel prices to decline to $1.50 per watt by the second quarter of 2010, down from $2.35 per watt in the second quarter of 2009. At this lower level, and with polysilicon prices around $50 per kilogram on long term contracts, he expects manufacturing capacity to pull back. Polysilicon is a key raw material used in the production of solar cells.

In the near term, Kumar said he prefers Trina Solar Ltd. and Renesola Ltd. given their cheap shares and competitive cost structures. Also, Kumar believes these companies will benefit from China's new feed-in tariff, which will pay for electricity generated by renewable resources. Kumar expects the Chinese government to introduce the tariff in the near future. Kumar rates Trina Solar and ReneSola "Outperform."

Shares of Trina Solar rose 68 cents, or 2.6 percent, to $26.99 in premarket trading. Renesola shares climbed 24 cents, or 4.5 percent, to $5.53 before the opening bell.