Solar energy companies face decreasing government support and oversupply, leading some to vertically integrate as they scramble to obtain project pipelines, says Christine Hersey, an analyst at Wedbush Securities, Inc.
“Germany has just negotiated additional midyear cuts to their feed-in tariff or subsidy programs, and France, actually in December, had instituted a three-month moratorium on these solar projects while they work out some changes in policy,” Hersey said. “And then the other factor is just the amount of supply that’s coming online. There have been many, many announcements and plans for capacity expansion for manufacturing in 2011, continuing the trend in 2010.”
Hersey points to Trina Solar (TSL) as an outperforming stock in her coverage that has managed to stay above the fray. She says TSL has a transparent business model, avoided purchasing project pipelines, and maintains a recurring and satisfied consumer base.
“I do think, relative to the other names in my coverage universe, they are pretty well positioned for 2011,” Hersey said. “They have one of the lowest cost structures out of any of the crystal and silicon manufacturers, and they also have a pretty well-diversified customer base as far as geography across some of these markets is concerned.”
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