Solar Stocks Start 2009 With Bad News, But Shrug It Off

Hard on the heels of a brutal year for solar stocks, the early days of 2009 are so far putting out a good share of negative news: sell recommendations from research analysts, a dire outlook from LDK, and Evergreen Solar shuttering a pilot plant.

Investors, though, are shutting their ears to the bad news. Evergreen was only slightly down and LDK ended Tuesday slightly up.

Or maybe it’s the case that the brutal selloff from last year was in part pricing in the news from this week.

Monday night, LDK LDK came out with its dispiriting guidance for the quarter just ended and for the coming year. It lowered its revenue guidance in its fourth quarter from a midpoint of $560 million to $430 million. Wafer shipments will fall from 265 megawatts to 250 megawatts, and gross margins will fall from 11.5 percent to 19.5 percent.For 2009, LDK sees revenue at a midpoint of $2.4 million, down from earlier expectations of $3 billion.

Early Tuesday morning, LDK shares tumbled as much as 11 percent on that news, but what looked like a short squeeze left the stock up 1 percent on the day at $14.99.

Evergreen also had bad news – it closed its Marlboro, Mass. pilot plant on Dec. 31. Not only did Evergreen bury the news in a press release trumpeting “continued progress” at a separate plant, it neglected to mention that shutting it could cost as much as $30 million this year. That detail was saved for an SEC filing, which the Cleantech Group noticed. Update: The move was expected, but the costs disclosed – as much as $30 million, including severance for some workers – are hitting at a hard time for solar companies. Evergreen also said shipments in the fourth quarter would be at the low end of guidance. Analysts at Oppenheimer and Thomas Weisel said they see a tough road ahead for the company.

Evergreen’s stock moved down 9 percent this morning. But as with LDK, it recovered, closing the day down 1.7 percent. Considering the disclosure came after ESLR had rallied 28 percent in the previous five trading days, it held up under the bad news pretty well.

Meanwhile, some analysts stepped forward with grim forecasts for the sector this year. JPMorgan’s Christopher Blansett openly urged investors to sell solar stocks because prices of solar panels and modules would keep falling for much of the year.

Blansett warned investors not to expect a recovery in solar stocks in the event of a broader economic rebound in 2009, as solar subsidies may have peaked in 2008 when Germany and Spain primarily drove demand. He expects solar subsidies to decline significantly in this year, forcing prices to drop between 25 and 40 percent compared to last year. Finally, Blansett added that constrained credit markets could “bring the alternative energy industry to a screeching halt if access to capital is not made more available.”

While investors followed that advice with some solar issues (Solarfun fell 4 percent, SunPower 6 percent), others didn’t (Hoku rallied 8 percent, GT Solar 6 percent.) This sector an especially unpredictable, even irrational one. But for now it seems it’s remaining fairly resilient in the face of some otherwise daunting news.


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