ZHABEI, China (
) -- The last thing a Chinese solar company needed was a downgrade on Tuesday, adding salt to the wound opened last week by Germany's plans to cut solar feed-in tariffs.
Too bad for
, in that case, which received a healthy pinch of salt on Tuesday morning as a Broadpoint Amtech research analyst downgraded the solar Chinese player.
Most of JA Solar's Chinese solar peers were finally seeing reduced levels of selling on Tuesday morning.
Yingli Green Energy
( SOLF) and
were all marginally positive to start Tuesday, after
last week's solar bloodbath in Chinese stocks.
was up more than 3% to start the week, with a gain of 17 cents on Tuesday morning to $5.27. ReneSola shares had dropped last week more than $1, from a Monday close of $6.13 to a Friday close of $5.10.
Significant selling action in JA Solar shares early Tuesday morning was the result of the downgrade.
Shares of JA Solar were down more than 3% and reached above the 4 million share-traded mark within an hour of the market open on Tuesday. The $5.43 price for JA Solar on Tuesday morning was the lowest price level for shares in more than a month.
JA Solar experienced a double-digit percentage decline last Thursday and Friday, on the German reports and
fears of a glut in the solar market if Germany moves ahead with feed-in tariff reductions by April -- the original expectation had been July or January 2011.
The extent of the selling in JA Solar seemed to be moderating within an hour of the market's open also, with the share decline of 6% down to a 3% decline by 10:15 am on Tuesday.
Gordon Johnson, an analyst at Hapoalim Securities -- and constant thorn in the side of solar companies for his often-bearish outlooks -- has already "called his shot" with JA Solar in 2010; Johnson says JA Solar shares are going back to $3.
Johnson's bearish outlook on JA Solar is not hard to justify when looking at recent volatile trading in the stock. JA Solar shares have doubled in a matter of months. From December to the middle of this month, JA Solar shares increased to a 52-week high of $6.95. However, JA Solar shares had been trading between $3 and $4 as recently as November.
The Broadpoint Amtech analyst cited a coming glut in solar, to which JA Solar will be sensitive. Chinese solar producers, including JA Solar and Suntech, have been beating the drums about rosy demand for 2010, most recently at a Needham & Co. conference last week just before the Germany news broke. The Broadpoint analyst sees overcapacity of 2 gigawatts for the year.
-- Reported by Eric Rosenbaum in New York.
>>For Solar, April May be the Cruelest Month
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