Wedbush Morgan is bullish long-term on solar stocks. However, the bank sees the need to be selective (don’t they all?) (See: First Solar’s (FSLR) recent drop). Here’s a rundown on Wedbush’s current analysis of the solar industry (Barron’s):
Manufacturing capacity expansion for polysilicon, solar wafer, and PV (photovoltaic) modules continues:
We have seen no signs of a slowdown in proposed manufacturing capacity expansions despite predictions that supply will eventually outweigh demand and the business will become heavily commoditized. In the past two months alone, we have seen significant expansion announcements from companies including…LDK Solar (LDK), Evergreen Solar (ESLR) and SunPower (SPWR).
[This will not ease fears about a capacity glut.]
Solar manufacturers continue to enter long-term polysilicon agreements to lock up supply and control pricing pressure:
…this trend shows no sign of slowing down. Solar cell and module makers including JA Solar Holdings (JASO), SunPower, Suntech Power Holdings (STP), Trina Solar (TSL), and Yingli Green Energy Holdings (YGE) have all recently entered into one or more long-term polysilicon and wafer supply agreements.
Retail module ASPs (average selling prices) are still flat:
Between February and May 2008, ASPs for modules greater than 125 watts were €4.72 to €4.74 per watt in Europe and $4.81 to $4.82 in the U.S.
Wedbush maintains a HOLD on Evergreen Solar (ESLR), target price is $11.
Wedbush maintains a STRONG BUY on SunPower (SPWR), target price is $132.