The shares of solar energy companies are rallying after Congressional leaders agreed to extend a key tax credit for the sector. In a note to investors today, research firm Roth Capital said the deal was "quite bullish for solar."
WHAT'S NEW: As part of a major budget deal, Congressional Republican leaders agreed to extend a 30% investment tax credit, or ITC, for utility, commercial and rooftop solar projects through 2019. The credit had been slated to fall to 10% in 2017. In return, Democrats agreed to Republicans' demands to eliminate a ban on crude oil exports from the U.S. that had been in place since 1975. Congress is slated to vote on the legislation later this week.
ANALYST REACTION: The extension of the ITC would probably have a positive impact on "nearly all solar stocks," according to Roth Capital analyst Philip Shen. However, he identified SolarCity (SCTY , SunPower (SPWR - Get Report) , First Solar (FSLR - Get Report) , 8point3 Energy (CAFD , Canadian Solar (CSIQ - Get Report) , Hannon Armstrong (HASI - Get Report) , SolarEdge (SEDG - Get Report) , and Enphase Energy (ENPH - Get Report) as the solar companies with the greatest likelihood of benefiting from the legislation. The analyst upgraded Chinese solar companies JA Solar (JASO and ReneSola (SOL - Get Report) , as well as solar inverter maker Enphase, to Buy from Hold on the news.
WHAT'S NOTABLE: Companies that could benefit from the repeal of the oil export ban include oil majors BP (BP - Get Report) , Chevron (CVX - Get Report) , ConocoPhillips (COP - Get Report) , Exxon Mobil (XOM - Get Report) , Royal Dutch Shell (RDS.A - Get Report) and Total (TOT - Get Report) . Smaller oil producers that have been pushing for such a repeal include Continental Resources (CLR - Get Report) , Pioneer Natural (PXD - Get Report) and ConocoPhillips (COP - Get Report) , according to Bloomberg.
PRICE ACTION: In early trading, Enphase soared 55% to $3.74, JA Solar advanced 5% to $9.65, ReneSola added 9% to $1.43, SolarCity jumped 27% to $50.93, SunPower rallied 17% to $28.58 and First Solar jumped 9% to $65.42.