China’s extreme manufacturing of solar panels caused a massive supply glut, and a lot of American solar companies had it rough in 2012.
This year, however, has been a different story. SunPower, First Solar, and Elon Musk’s Solar City have been on a tear lately, with their stock prices surging 50% – 300%.
Here’s their chart YTD:
In a research note today, Goldman Sachs’ Brian Lee, Thomas Daniels and Britt Boril explain why: they’re focusing more on projects rather than parts, and they’ve pulled out of Europe:
The key change within US solars, in our view, has been an evolution of business models to downstream, project businesses. As fundamentals have shifted away from manufacturing, supply-demand and component ASP debates toward backlog and pipelines, we believe earnings have stabilised, with visibility now firm over the next 12-18 months. Also, a geographic mix shift away from Europe toward North America and emerging markets such as Japan, India, South America, and the M. East has reduced policy risk.
Here’s the evolution in sales data…
Goldman SachsAnd here’s the new geographic breakdown…