Have Solar Stocks Sold Off Too Much?

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If one sector is sensitive to market sell-offs or to lower and lower crude oil prices, it is the alternative energy sector — including solar energy. Well, the solar energy sector has had to face a dual drop. The Nasdaq is now down over 7% from its most recent high, and oil has fallen to under $85, after being as high as $102 recently as June. You can guess what has happened to solar stocks — they have been crushed.

24/7 Wall St. has taken a look at the trading in some of the key solar stocks. We have evaluated some of the solar shares to see just how bad the carnage is. This includes trading prices, how much the drop is and even a review of analyst price targets. We do want to stress that picking a bottom in the solar stocks is a bit like a game of catching daggers being dropped off an eight-story building, so do not assume that this is a bottom just because these stocks have been overly punished.

First Solar Inc. (NASDAQ: FSLR) shares were down another 3% late on Monday at $52.22, with a $5.2 billion market cap. The U.S. solar leader’s 52-week range is $42.50 to $74.84, and its consensus analyst price target is still all the way up at $67.50. While the stock had risen above many analyst price targets, First Solar shares are now down 30% from its recent peak.

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SolarCity Corp. (NASDAQ: SCTY) was recently down another 6.6% at $50.01, with a market cap of about $4.6 billion. Its 52-week range is $42.38 to $88.35, and its consensus analyst price target is still all the way up at $90.90. Analysts were also behind the curve on SolarCity on much of the rally higher, but its shares are now down about 44% from its peak and the share price is now handily under the consensus analyst target.

Trina Solar Ltd. (NYSE: TSL) was down 3.5% at $9.57 with a $784 million market cap. The Chinese solar leader’s 52-week range hit at a new low on Monday, with a new range of $9.50 to $18.77 — down almost 50% from its peak! Amazingly, Trina Solar’s consensus analyst price target is still listed as $18.49. Trina Solar is now down almost 50% from its recent year-high, and for it to reach the analyst targets it now would be close to a double.

Vivint Solar Inc. (NYSE: VSLR) could not have picked a worse time to come public if it tried. After selling shares at $16 on its October 1 IPO date, the 1.1% drop on Monday to $11.70 is a drop of 27% in less than two weeks! The post-IPO range also saw a new low of $11.50 on Monday. The recently sold private equity-backed solar player that was partially sold out of Blackstone has been a further drag on solar’s bright image.

ALSO READ: Analysts Signal Solar Risks and Opportunity in Japan

And what about the speculative solar stock Enphase Energy Inc. (NASDAQ: ENPH)? The solar microinverter player with a $442 million was down 2.5% at $10.29 on Monday afternoon with a 52-week range of $4.54 to $17.97. While this stock has a consensus analyst target price of $15.44, it is considered among the more speculative of companies.

Then there is the Guggenheim Solar ETF (NYSEMKT: TAN). After a 2.5% drop to $34.08, this exchange traded fund has a 52-week range of $33.11 to $51.07. This ETF has total managed assets of $341 million, according to the Guggenheim website, but investors should know that large foreign-issued solar shares have a large position in the ETF holdings. This ETF is now down over 33% from its recent peak back on March 7.

Selling of this magnitude is generally far from normal, even for solar. The problem is that there are no catalysts seen right now that would drive solar shares in a snap-back rally that investors know about today. A falling stock market and falling oil prices are not going to add much support, so this could be a volatile sector until one or both of those find a bottom. As a reminder, the stock market can remain irrational longer than most investors can remain solvent betting against logic.