Solar Stock Gainers: First Solar, GT Solar

NEW YORK ( TheStreet) -- U.S. solar companies GT Solar ( SOLR) and First Solar ( FSLR) received bullish valuation calls on Wednesday morning, and are among U.S. solar stocks gaining in trading.

Wunderlich Securities released a note on GT Solar on Wednesday morning stating that its valuation was a steal based on the likelihood of an acquisition by a larger equipment company.

In the case of First Solar, Piper Jaffray is betting that its upcoming annual guidance conference call will be a catalyst for shares to move higher.

GT Solar shares were up more than 5% in early trading on Wednesday.

First Solar shares were up a more modest 2%, but still the only other considerable gainer among U.S. solar stocks.

Wunderlich analyst Theodore O'Neill wrote on Wednesday morning, "Investors should take a hard look at the unusual valuation of GT Solar (SOLR) stock relative to its peers. At the current valuation of 5.7x our 2011 EPS estimate of $1.37, an acquisition of GT Solar by almost any equipment company would be immediately accretive even at twice the price (assuming redundancies were eliminated)."

Likely acquirers of GT Solar, according to Wuderlich, are semiconductor or solar equipment makers. Amtech Systems ( ASYS), Applied Materials ( AMAT), BTUI ( BTUI) and Novellus ( NVLS).

Wunderlich argues that paying a 2x premium to the current GT Solar share price would still be accretive for the acquiring company.

General analyst expectation ahead of the First Solar annual conference call -- it's simply a conference call this year and not an actual investor day as in past years -- is for a positive catalyst, though whether it's just for First Solar or for the solar stock group as a whole remains open to debate.

First Solar will be hosting the call on the afternoon of Dec. 14.

Piper Jaffray is betting that the call will be a positive for First Solar shares specifically, starting the revenue and EPS guidance for 2011 above the Street consensus $3.6 billion and $8.50..

Piper Jaffray also expects First Solar to be able to show that it project pipeline business is bankable in 2011, and the analyst is estimated 620 megawatts from the project business for 2011.

Module pricing and euro exposure are issues that weigh on the sector as a whole headed into 2011, and Piper Jaffray takes the bullish case on First Solar, arguing that an estimated 30% of its 2011 shipments will be to the North American project business, reducing euro exposure and raising blended ASP. The analyst estimates that Euro zone exposure is reduced to 70% in 2011 from 82% this year, and First Solar's doubling of its Germany-based manufacturing operations will further insulate it from euro zone pressure.

Other analysts contend that since the First Solar call is coming at a time when first-quarter shipments will already be going out the door, the solar bellwether should be able to provide a firmer read on first-quarter conditions than the solar sector companies were able to do during recent third-quarter earnings reports. First Solar earnings reports have also often been viewed a read-through for the industry, but haven't always had the intended effect of providing a boost to the sector.

First Solar shares did rally slightly after last year's annual analyst day, however, the entire solar sector would slump shortly thereafter as feed-in tariff reductions fears came into focus by early 2011. While bullish analysts are predicting that Germany won't install a hard cap on solar next year, the issue still looms as a potential wildcard for solar trading in the first quarter, as does the direction of the euro versus the dollar.

-- Written by Eric Rosenbaum from New York.

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