AstraZeneca PLC (NYSE: AZN) Cut to Underweight at JPMorgan.
BlackRock, Inc. (NYSE: BLK) Cut to Neutral at Stern Agee.
Broadcom Corp. (NASDAQ: BRCM) Reiterated Buy with $46 price target at Argus.
Constellation Energy Group, Inc. (NYSE: CEG) Cut to Neutral at Citigroup.
Consolidated Edison Inc. (NYSE: ED) Cut to Neutral at Citigroup.
eBay Inc. (NASDAQ: EBAY) Reiterated Buy with $40 price target at Argus.
LM Ericsson Telephone Co. (NASDAQ: ERIC) Cut to Neutral at Credit Suisse.
Exelon Corporation (NYSE: EXC) Cut to Neutral at Citigroup.
Google Inc. (NASDAQ: GOOG) downgraded to Hold at Benchmark; Raised targets at boutique firm Global Equities Research.
Netflix, Inc. (NASDAQ: NFLX) Maintained Underperform and cut estimates at Needham.
Nokia Corporation (NYSE: NOK) Raised to Outperform at Credit Suisse (full summary).
Pacific Sunwear of California Inc. (NASDAQ: PSUN) Raised to Buy at Janney Capital Markets.
ReneSola Ltd. (NYSE: SOL) named as the Bear of the Day at Zacks Investment Research.
SAP AG (NYSE: SAP) Raised to Neutral at BNP Paribas.
Sanofi (NYSE: SNY) Cut to Neutral at JPMorgan.
Trinity Industries, Inc. (NYSE: TRN) named as value stock of the day at Zacks.
United Parcel Service, Inc. (NYSE: UPS) Cut to Neutral at HSBC.
VIVUS Inc. (NASDAQ: VVUS) Started as Perform at Rodman & Renshaw.
VMware Inc. (NYSE: VWM) Started as Buy at Stern Agee.

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JON C. OGG

AEGON N.V. (NYSE: AEG) Cut to Neutral at Goldman Sachs.
AutoZone, Inc. (NYSE: AZO) named Momentum stock of the day at Zacks.
Barrick Gold Corporation (NYSE: ABX) named as Value stock of the day at Zacks.
FTI Consulting, Inc. (NYSE: FCN) named Bull of the Day at Zacks.
PepsiCo, Inc. (NYSE: PEP) Reiterated Buy at Gabelli & Co.
RadioShack Corporation (NYSE: RSH) named Bear of the Day at Zacks.
Raytheon Co. (NYSE: RTN) maintained Hold at Argus.
ReneSola Ltd. (NYSE: SOL) maintained Neutral but cut target to $2 at Credit Suisse.
Walgreen Co. (NYSE: WAG) Reiterated Buy at Gabelli & Co.

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JON C. OGG

OmniVision Technologies (NASDAQ: OVTI) is down 17.5% before market open to $14.28, relative to a 52-week range of $12.60 – $37.04.

Pharmasset, Inc. (NASDAQ: VRUS) is up 8.5% before market open to $74.80, relative to a 52-week range of $19.62 – $88.52.

ReneSola Ltd. (NYSE: SOL) is down more than 5% premarket to $2.25, relative to a 52-week range of $1.46 – $14.13.

TKLC (NASDAQ: TKLC) is up 10.4% before market open to $10.93, relative to a 52-week range of $5.64 – $13.98.

Whether or not you trust that P/E ratio is up to you, because we show a Thomson Reuters consensus estimate of $0.42 EPS for 2011 and $0.49 EPS in 2012.  We would note that trusting any estimates on Chinese and solar companies right now is guesswork, but those were the most recent figures seen.  Today’s news is that ReneSola and its CEO have bought back shares in a total amount of 1,716,964 ADSs.  The company purchased 645,424 ADSs under its recently announced $100 million share repurchase program announced last month.  Its CEO separately purchased 1,071,540 ADSs as well.

The company noted, “ReneSola’s management may also acquire shares in the open market during open trading windows.”

CEO Xianshou Li was quoted as saying, “At present, we believe our stock is considerably undervalued. We believe our fundamentals are strong, and our business has been bolstered by our new Virtus wafer technology and increasing in-house production of polysilicon. Moreover, we maintain a positive long-term view on the solar industry as a whole, despite near-term fluctuations and challenges. Our swift move to repurchase our stock demonstrates our confidence in the long-term success of our business. Should the opportunity arise, we will continue to utilize our strong cash position to repurchase our shares in order to maximize shareholder value and reaffirm the market of our leadership position in wafer and solar manufacturing.”

The company does have debt, but it also has cash on hand if the reporting of its books is accurate.  The $100 million in the buyback allotment compares to a current market capitalization rate of only $261 million.

Shares are up almost 3% at $3.10 this morning.

JON C. OGG

Riding the coattails are First Solar Inc. (NASDAQ: FSLR), LDK Solar Co. Ltd. (NYSE: LDK), Trina Solar Ltd. (NYSE: TSL), SunPower Corp. (NASDAQ: SPWRA), and ReneSola Ltd. (NYSE: SOL). Missing out on the fun is JA Solar Holdings Co. Ltd. (NASDAQ: JASO), which reported negative operating margins last week. The other solar stocks suffered, but JA Solar is in a class by itself.

Yingli’s second quarter report last Friday showed shipments up by 37% sequentially, with revenue up 27% year-over-year and EPS of $0.34. Gross margins fell from 27.3% to 22% sequentially and by more than 33% year-over-year. Suntech this morning reported an adjusted EPS loss of -$0.19 on a 33% rise in revenue and adjusted gross margins of 15.1%, down from 19.7% a year ago.

Both companies predict that shipments will either be inline with previous forecasts (Yingli) or increase by 15% in the third quarter (Suntech). Suntech also reported an increase of shipments by 48% year-over-year and 2% sequentially in the second quarter.

All those new shipments from Suntech will further lower margins, to a newly forecast level of 11%-13%. Yingli said nothing about its margins for the rest of the year, but did re-iterate its shipment forecast for the fiscal year at 60%-65% higher than the 2010 fiscal year.

Suntech, which is the world’s largest maker of solar panels, can afford to ship more at lower margins simply because it ships so many panels. Yingli, a more vertically integrated supplier, is able to withstand some of the pricing pressure on rising module volumes.

First Solar, the world’s low-cost provider, is able to withstand the pricing pressure as well, but it’s margins are taking a beating as the silicon-based Chinese suppliers continue to lower their costs.

The story on margins is that they will continue to fall for everyone. Only those companies that can withstand the margin pressure will remain standing. This is putting some energy in the solar stocks today because investors believe the gainers will survive. But there are still too many solar players for all of them to make it, especially as manufacturing capacity continues to grow. Today’s boost is likely to be short-lived.

In the late morning today, Suntech shares are up more than 3%, to $5.26, in a 52-week range of $5.10-$10.83. Suntech shares posted that 52-week low last Friday. Yingli shares are up nearly 6%, to $5.57, in a 52-week range of $5.00-$14.29. First Solar shares are up about 1.5%, at $90.06, in a 52-week range of $87.82-$175.45. LDK shares are up about 1.5% as well, at $5.14, in a 52-week range of $4.65-$15.10.

JA Solar shares are getting another beating today, down more than -5% at $3.30, barely within the 52-week range of $3.28-$10.24. The Guggenheim Solar ETF (NYSE: TAN) is up about 0.8%, at $4.92, again just a few pennies inside the 52-week range of $4.88-$9.34.

Paul Ausick

The list of solar companies that have disappointed on earnings is nearly endless, but some of the bigger names are First Solar Inc. (NASDAQ: FSLR), SunPower Corp. (NASDAQ: SPWRA), Trina Solar Ltd. (NYSE: TSL), ReneSola Ltd. (NYSE: SOL), Canadian Solar Inc. (NASDAQ: CSIQ), and Suntech Power Holdings Co. Ltd. (NYSE: STP). Evergreen Solar Inc. (NASDAQ: ESLR) even chose last week to file for bankruptcy.

LDK’s revisions were substantial. Revenue guidance for the second quarter from $710-$780 million to $480-$500 million. Analysts had a consensus estimate of $714 million. For the year, forecast revenue was revised downward from $3.5-$3.7 billion to $2.5-$2.7 billion. The company will also write down up to $60 million in inventory.

And it gets worse. Gross margins are expected at a meager 1.5%-2.5% on shipments of just 75-80 megawatts of panels in the quarter. How bad is that? The forecast in April called for panel ships in the second quarter of 200-220 megawatts. Full-year shipments are now forecast to fall from 750-800 megawatts to 600-700 megawatts.

So, shipments are tanking and margins are disappearing. It’s no wonder that LDK’s shares are trading off -22% in the pre-market this morning, at $5.10, within reach of a 52-week low of $4.65. The 52-week high of $15.10 may be disappearing over the horizon.

LDK has more problems than just weak shipments and falling margins. A board member who was the head of the company’s audit committee resigned last month, calling into question some of LDK’s accounting practices. Trina Solar faces some of the same charges related to dicey accounting. Combined with issues related to reverse mergers that appear to be crooked, Chinese solar makers have taken a real pounding in the past two months.

About the only thing that would restore some confidence in the industry is a good quarter, and that does not appear to be in the picture for at least the second half of this year.The Guggenheim Solar ETF (NYSE: TAN) fell within a hair of its 52-week low yesterday, closing at $5.22 in a 52-week range of $5.08-$9.34.

Paul Ausick

JA Solar had predicted that it’s operating margins would be negative in the low single-digit range. That number actually came in at -2.7%, about as expected. However the company posted a loss per ADR of -$0.22, compared with an expected loss of -$0.03. JA Solar also missed a consensus revenue estimate of $419 million, turning up sales of $413 million.

Today’s earnings report follows poor earnings and guidance from Trina Solar Ltd. (NYSE: TSL), ReneSola Ltd. (NYSE: SOL, First Solar Inc. (NASDAQ: FSLR), and Canadian Solar Inc. (NASDAQ: CSIQ). Suntech Power Holdings Co. Ltd. (NYSE: STP) reports earnings next week and the consensus estimate includes EPS of $0.16 on revenue of $800 million.

The second calendar quarter of 2011 has been beyond unkind to the solar makers. The slowdown in purchases from Europe really took hold during the quarter. JA Solar, for example, shipped just 401 megawatts of solar cells in the second quarter, down 11% sequentially. The company expects to sell 450-470 megawatts in the third quarter, and forecasts full-year sales falling from a previous estimate of 2,200 megawatts to 1,800 megawatts.

JA Solar will be lucky if the drop is only that much. Like the other solar players, the company believes that shipments will improve in the second half of 2011. Maybe — but if they do it will be at the expense of margins.

By now the drumbeat of ‘oversupply, oversupply’ has been pounded out so often that just about everyone except the solar makers themselves have gotten the message. Selling more may keep revenues up and inventory levels down, but profits will not improve. It simply can’t happen, especially as the solar makers bring even more manufacturing capacity online.

After the first hour of trading this morning, JA Solar is down nearly -9%, at $3.51, in a 52-week range of $3.28-$10.24. Trina is down nearly -5.5%, at $14.21, in a 52-week range of $13.02-$31.89. ReneSola is off more than -7.5%, at $3.13, in a 52-week range of $2.65-$15.34. Canadian Solar is off nearly -5%, at $7.05, in a 52-week range of $6.33-$17.63. Suntech is down about -5.75%, at $5.76, in a 52-week range of $5.45-$10.83. First Solar is doing slightly better, down less than -3.25% at $96.35, in a 52-week range of $92.75-$175.45.

The Guggenheim Solar ETF (NYSE: TAN) is down nearly -6.5%, to $5.26, in a 52-week range of $5.08-$9.34.

Paul Ausick

Revenue in the second quarter sequentially decreased 30.6 percent to $249.3 million, while gross margin fell 980 basis points to 18.4 percent. Chief executive officer Xianshou Li blamed a 10.6 percent decline in product shipments (to 295.5 megawatts) on subsidy cuts in key European markets, like Germany and Italy.

Mainland China (including Hong Kong) remains the company’s biggest market for solar wafers (38.4% of total sales) and Europe its top market for wafer sales (with Germany and Italy representing 15% and 5.8 percent of total sales). In the second-quarter, total wafer and module shipments sequentially declined 5.3 percent to 230.5 MW and 26.2 percent to 65 MW.

Lower feed-in-tariffs in European markets, however, belie other economic realities pressuring margins: Exacerbating a demand-driven environment is overcapacity, as mainland competitors flood both domestic and global markets with photovoltaic (PV) products, from crystalline wafers to modules. Supply gluts are accelerating the drop in average selling prices (ASP) quicker than previously estimated: The ASP of solar wafers and modules in the quarter dropped to $0.69 per watt and $1.53 per watt, respectively, compared to ASP of $0.87 and $1.72 in the first quarter.

Already one of the lowest-cost wafer suppliers, the company believes it can stabilize margins and mitigate falling end-demand prices through continued efforts at manufacturing cost reductions. Think again.

The crystalline silicon raw material plus the cost of slicing (the principal input costs in wafer manufacturing) represent more than 50 percent of total module cost. Given a fixed price for the raw silicon, a wafer manufacturer like ReneSola can best drive down costs through various process levers, from material and quality yield improvements to decreases in consumables usage, according to a recent white paper from semiconductor giant Applied Materials (NYSE: AMAT).

Non-silicon wafer processing costs rose two cents in the quarter to 26 cents per watt, which the company attributed to learning curve issues involved with further migration toward its higher-quality (more solar efficient) Virus wafer product. Nonetheless, ReneSola’s chief financial officer, Henry Wang, reaffirmed on the earnings’ call that processing cost would decrease to $0.19 by the end of 2011.

In total, ReneSola is targeting a 25 percent reduction in wafer processing costs, driven principally by reducing consumable costs, such as increasing mix percentage use of recycled slurry and bringing in-house more polysilicon production and wire-saws (which cut the ingots into wafers).

Management’s cost reduction efforts ought be applauded – but not when they’re accompanied by less-than-transparent public posturing. Although the company has been successful in reducing the amount of silicon material required to produce solar electricity, from 6 grams per watt to 5.8 grams, continued process optimization and increased productivity (quality yield) will require additional investments in capital, which the company is neglecting (for sake of short-term margins?).

Due to “continued challenging business conditions,” ReneSola is cutting its capital spending plans for the year to only $270 million, from a previously disclosed $350 million.

Expanding in-house production of polysilicon remains critical to lowering overall manufacturing costs. Although the company lowered in-house production cost to about $40 per kilogram, as compared to approximately $54 per kilogram purchased from third-party suppliers, it still is several years removed from bringing more upstream production in-house.

The company has long promised to expand annual polysilicon production capacity to 8,500 metric tons (from a recent 787MT in second-quarter 2011) at its Sichuan province facility. It can cost more than a billion dollars (according to industry papers) to build a vertically-integrated polysilicon plant (with annual output capacity of 8,500 MT). Deferring critical capital expenditures, combined with expected electrical power shortages on the mainland, makes it difficult to ascertain how ReneSola will attain previously stated raw material output goals.

ReneSola has withdrawn full-year guidance forecasts, too, but with the company remaining captive to supplier polysilicon price, it’s possible that gross margins could fall even further than the 6-8 percent level expected next quarter.

David Phillips

Other solar stocks making news this week included SunPower Corp. (NASDAQ: SPWRA), Trina Solar Ltd. (NYSE: TSL), LDK Solar Co. Inc. (NYSE: LDK), JA Solar Holdings, Co., Ltd. (NASDAQ: JASO), ReneSola Ltd. (NYSE: SOL), MEMC Electronic Materials, Inc. (NYSE: WFR), and Yingli Green Energy Holdings (NYSE: YGE).

An analyst at Jefferies raised First Solar shares from ‘Hold’ to ‘Buy’ and raised the company’s target price from $115 to $132. That indicates that First Solar has finally managed to make investors understand that explosive growth is no longer in the cards, but that steadier growth is. The company’s project pipeline and its low-cost leadership in the sector position First Solar well for the relatively austere days ahead.

SunPower did not fare as well. The company lowered its profit forecast as a result of eroding prices for solar panels. JA Solar, Trina, and MEMC have given similar warnings.

ReneSola reported earnings on Wednesday and revenues fell more than -30% from the same period a week ago, again driven by falling gross margins. The company also shipped less product year-over-year by -10%. Even worse, the company’s forecast for gross margins in the third quarter are just 6%-8%, down dreadfully from second-quarter gross margins of 18.4%. In the first quarter the company’s gross margins were 28.2%.

Renesola had already announced the day before that it plans to grow production capacity by a factor of three next year and to cut its raw materials costs by producing some silicon wafers of its own. The overall effect of the two announcements lifted Renesola shares by about 30% between Monday’s opening price and Friday’s quote at around noon.

MEMC got a boost from a report of insider buying of the company’s stock. The CEO and five more company officers bought more than 450,000 shares on August 5th. The news hit the market on August 9th, and the shares jumped 19%.

If in fact First Solar has finally been able to manage investor expectations for the company’s shares, we should soon be able to see some firming up for the other solar players. SunPower shares are down about -5% for the week primarily on the company’s weaker outlook and the fact that it faces the most challenges to its margins. Until the company can show that it has its costs under control the shares are likely to continue to see-saw at best.

The Chinese solar makers face a similar margin compression problem, and Trina and LDK are also dealing with some questions about their accounting practices. It’s difficult to believe that anything but hope for these stocks is what is giving them a share-price boost. LDK’s shares are up nearly 20% on the week for no apparent reason, and JA Solar’s shares are also up about 12%. The only explanation for these increases in share price is that investors still treat the sector monolithicly, believing that good news or performance or expectations for one company washes through the whole sector. Once that belief is finally put to rest, the Chinese solar stocks will at last find a proper level of expectation. And that level is very likely going to be lower than it is now.

For the week ahead, First Solar could well continue gathering momentum. The company has received approval to begin construction on its Desert Sunlight project in southern California, and it is still waiting for a final decision on a $1.88 billion loan guarantee for the project. That approval, when it comes, will give the company another shot in the arm.

The two main ETFs that follow the solar sector are the Guggenheim Solar ETF (NYSE: TAN) and the Market Vectors Solar Energy ETF (NYSE: KWT). TAN has gained about 9% on the week and KWT is up about 11%. Both are thinly traded and are currently posting a negative return for the year to date. But both are up more than 2% today, with TAN at $5.73 in a 52-week range of $5.08-$9.34 and KWT at $8.29 in a 52-week range of $6.97-$14.33.

Paul Ausick

Another struggling company, Evergreen Solar Inc. (NASDAQ: ESLR) reported a -60% drop in sales for the first quarter of 2011 and has now received a deficiency letter from Nasdaq that the company no longer meets the $1/share minimum stock price and will be delisted unless the situation is corrected by next January 3rd.

One of the hottest solar stocks of recent days has been GT Solar International Inc. (NASDAQ: SOLR), which has announced several large orders for its solar manufacturing products. A new research report has now predicted a drop of -47% in manufacturing equipment sales in 2012. And solar PV maker ReneSola Ltd. (NYSE: SOL) has cut its guidance for the rest of 2011.

American Superconductor’s problems with Sinovel have been well documented and should be no surprise.  The writedown totals $74.7 million against previously stated revenues of $215.7 million. The company also said it expects revenues for its fiscal year ending in March 2011 to total just $307 million, far below the current Street estimate of $360 million, and more than -30% below original estimates.

The revenue loss is perhaps the least of the company’s worries. Because American Superconductor had booked the revenue before it was received, the company faces more uncertainty about its accounting practices. The company did say that it should have used a cash-based method of accounting. Shares are down more than -5%, at $8.08, having bounced back from an intra-day low of $7.44, virtually at the bottom of the 52-week range of $7.40-$38.88.

Evergreen’s announcement should also have been no surprise. In its SEC filing the company noted that if the shares are delisted, “the holders of its existing convertible notes will have the right to require the Company to repurchase their notes, which it is almost certain the Company would be unable to do. Such a default under the Company’s obligations to its note holders would likely cause the Company to file for bankruptcy.”

GT Solar has been a high flyer in the solar sector, posting a new 52-week high earlier this month. The company’s shares are getting beaten down nearly -9% today following a loss of more than -4% yesterday. Capacity expansions at solar PV makers have been driving GT Solar’s share price increases, but those capacity boosts are expected to result in serious oversupply by the end of this year and into the next two. Demand for more manufacturing equipment is expected to drop as well.

ReneSola shares are off more than -5% following the company’s pull back on quarterly revenue and gross margins. The revenue forecast for the June quarter was reduced from $280-$300 million to $235-$245 million. Analysts had been expecting $287 million. The forecast for gross margin fell from 25%-27% to 17%-19%.

The Guggenheim Solar ETF (NYSE: TAN) is also falling today, down more than -3.5%, to $6.46, after posting a new 52-week low of $6.44. The new range is %6.44-$9.34.

Paul Ausick