Citigroup initiated coverage on three solar stocks today: one buy, one hold, one sell. Overall, future excess cell supply is the chief reason Citigroup worries that struggling solar companies will continue to struggle.
First Solar (FSLR): BUY, target $450. Citi believes that First Solar’s two to three year lead on the competition coupled with its strong overall business model make it attractive. Citi is especially optimistic about the company’s new Malaysia facility.
Sun Power (SPWR): HOLD, target $105. High cell production costs and disappearing competitive advantages in silicon cost and installation cost are the main drivers behind this call. Citi is also worried about Sun Power trying to sell a premium product in a commodity market.
Evergreen Solar (ESLR): SELL, target $8. Strain of significant financing requirements over the next several years will clobber stock. No sustained EPS growth above $1/share, $5/share stock downside.