Solar Stocks Get The Icarus Treatment

Energy Conversion Devices was, not so prolonged ago, one of the darlings of immature appetite investors. Like alternative American manufacturers of photovoltaic panels, ECD has for years enjoyed a technological and reputational value over unfamiliar makers. Prices, however, have eventually held up to ECD and the U.S. brethren similar to First Solar and SunPower.The solar energy industry is sealed in a cycle of descending demand, overcapacity and descending prices that is eviscerating the value American firms had over their Chinese and Taiwanese rivals only a year or dual ago. There is a bolt of supply only as governments prune at the back of the subsidies that enticed so most new entrants in to the commercial operation last decade.emailprintreprintnewslettercommentssharedel.icio.usDigg It!yahooFacebookTwitterRedditrssforbes:http://www.forbes.com/2010/03/23/energy-conversion-devices-markets-equities-solar.html?partner=yahoobuzzUntil recently, ECDs thin-film solar panels cost significantly less per watt to have than required silicon panels, says Citigroup researcher Timothy Arcuri. But silicon prices have depressed sharply, withdrawal Asian manufacturers, who have entrance to poor genuine estate, tender materials and labor, with the cost advantage. Evergreen Solar ( ESLR - news - people ) and SunPower ( SPWR - news - people ) are additionally descending at the back of whilst First Solar ( FSLR - news - people ), prolonged the cost leader, looks exposed if prices keep entrance down.Investors appear rather wakeful of the dynamics at fool around in the solar business. While the rest of the marketplace rallied in the last year, the share prices of American producers have tumbled, nonetheless not by similar to amounts. ECD is down 47.5% in the last twelve months whilst First Solar, that additionally creates thin-film panels and hardly stays the cheapest producer, is down only 14.5%. For the Chinese firms that were extrinsic producers a year ago but marketplace leaders today, their climb has been spectacular. Trina Solar ( TSL - news - people )s American depositary profits are up 418% in twelve months and Yingli Green Energy ( YGE - news - people ) is up 201%.There is a possibility that descending prices will hint a miscarry in demand, generally if oil prices ascend as they did in 2008. Arcuri, however, sees one after another suffering for all but the cheapest manufacturers. Prices might dump to $1.50 a watt by the finish of the year from closer to $2 now, creation it difficult for ECD to consequence some-more than single-digit sum distinction margins, says Arcuri. Oversupply stays a problem: ECD has 7 and a half months of register to work through. Arcuri predicts money upsurge will sojourn disastrous and thinks the association should traffic closer to the discernible net value of about $6 a share. At a stream share cost of $7.45 ECD, and the alternative American firms that sparked the solar boom, see vulnerable.
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