Solar Manufacturers

Tuesday, April 1, 2008

Solar Manufacturers: Friedman Billings anticipates pricing/margin concerns not yet baked into solar stocks

Friedman Billings anticipates that polysilicon shortages will continue for at least 18-24 months, and they foresee ongoing adverse implications for solar cell and module manufacturers. Solar names and many related stocks are down by nearly 40% since early Jan 2008, but firm believes further downside risk remains. Investors may finally discount double-digit pricing declines throughout the supply chain during CY09, negatively affecting margins. In the near term, they continue to favor upstream manufacturers like WFR and WCH. In the long term, they reiterate that integrated businesses with close proximity to end customers and access to in-house financing are likely to perform best in a commodity industry characterized by elastic demand