Solar on the Move, When Good News Challenges Bad News (SOLR, SPWRA, TOT, FSLR, LDK, JASO, AMAT, TAN)

Solar equipment maker GT Solar International Inc. (NASDAQ: SOLR) has raised the forecast for its first fiscal quarter on the strength of more than $700 million in new orders. SunPower Corp. (NASDAQ: SPWRA), which is nearing the end of a tender offer for 60% of its shares from Total SA (NYSE: TOT), is suffering ratings downgrades.

About the only significant change in the solar sector since yesterday is that Italy’s prime minister has said that the country will not build any new nuclear generation, instead going with renewables. That is boosting Italian solar shares and probably giving a boost to solar makers First Solar Inc. (NASDAQ: FSLR), LDK Solar Co. Ltd. (NYSE: LDK) and JA Solar Holdings Co. Ltd. (NASDAQ: JASO).

GT Solar makes production equipment used in manufacturing solar PV cells and LEDs. Its chief competitor in this market is Applied Materials Inc. (NASDAQ: AMAT). The race to build new solar PV manufacturing has taken off this year, and GT Solar is thriving.

The market for solar PV installations has wobbled all year, primarily due to a projected oversupply of solar modules resulting from lower projected installations in leading European markets. SunPower managed to dodge the takedown in solar PV makers with an offer of $23.25/share from oil giant Total. Other solar makers haven’t been so lucky, but now that the deal with Total is closing SunPower is coming face-to-face with reality.

Three separate analysts have now downgraded SunPower shares and lowered price targets for the rest of the year. Kaufman Bros. has lowered its price target from $23.25 to $14 on the theory that once the deal with Total is completed, this is the what the stock is worth. The Kaufman analyst also cut the company’s non-GAAP EPS estimate from $1.99/share to $1.42.

Goldman Sachs cut SunPower’s rating from ‘neutral’ to ‘sell’ primarily because the analyst doesn’t believe that the company can absorb the pricing declines quickly enough. Goldman’s analyst also lowered the stock’s target price to $14/share.

A third analyst at CLSA Asia-Pacific Markets cut his rating from ‘underperform’ to ‘sell’ and reduced SunPower’s price target from $18.50/share to $16.50. The move was based on the analyst’s belief that the deal with Total only temporarily boosted SunPower’s shares.

GT Solar raised its revenue forecast for its first fiscal quarter which ends on July 2nd from $140-$150 million to $225 million. The EPS estimate rose from $0.08-$0.11/share to $0.30/share, and GT Solar’s estimate of gross margins rose from 37% to 43%-44%. For the full 2012 fiscal year, revenue estimates were unchanged at $1-$1.1 billion with EPS of $1.55-$1.85/share and gross margins of 42%-44%.

Shares of GT Solar are up more than 6.5% today, to $12.99, near the top of the 52-week range of $5.36-$14.00. SunPower’s shares are trading down more than -1.5%, at $20.94, in a 52-week range of $9.61-$22.60.

First Solar’s shares are up more than 3%, to $119.87, in a 52-week range of $100.19-$175.45. LDK’s shares are also up nearly 3.5%, to $7.18, in a 52-week range of $5.00-$15.10. JA Solar’s shares are up about 5.5%, to $5.37, in a 52-week range of $4.48-$10.24. The Guggenheim Solar ETF (NYSE: TAN) is up about 3.3%, to $6.88, in a 52-week range of $6.40-$9.34.

Paul Ausick