Citigroup Analyst Starts Coverage of Solar Sector in Bullish Note on Growing Industry
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NEW YORK (AP) -- A Citigroup analyst began coverage of the solar power sector Wednesday in a bullish report calling the industry "lightly penetrated" with prospects for long-term growth.
"The $10 billion global solar equipment industry (generating electricity from energy released by the sun) has exhibited strong 30 percent-plus growth over the past five years," analyst David B. Smith wrote in a note to clients.
Yet, Smith points out that solar represents less than a tenth of a percent of global electricity generation capacity. That leaves the industry -- recently boosted by government incentives from Germany to California -- room to expand.
"We see a lightly penetrated industry with many years to grow," he wrote.
Taking a "decidedly bullish" stance, Smith rated three solar equipment makers a "Buy": SunPower Inc. with a $55 price target, Evergreen Solar Inc. at a $13 price target and Suntech Power Holdings Co. with a $52 price objective. He started Energy Conversion Devices Inc. at "Hold" with a $43 price target.
Weaker energy prices have lately weighed on alternative energy stocks, including solar equities. The analyst said the weakness has opened a buying opportunity.
However, the analyst cautioned that the cost of silicon, which is used to make solar cells and has tripled in three years, is a key risk for the industry. Also, the industry's reliance on government subsidies for competitiveness presents a risk, as well.
Shares of SunPower rose 85 cents, or 2.7 percent, to end at $32.55 on the Nasdaq. Also on the Nasdaq, Evergreen Solar shares added 13 cents to close at $9.27, and Energy Conversion shares lost 65 cents to close at $38.90.
Suntech Power shares rose 13 cents to finish at $26.43 on the New York Stock Exchange. |
