First Solar Inc. (NASDAQ: FSLR) and SunPower Corp. (NASDAQ: SPWRA) both derive substantial revenue from Europe in general and Italy in particular. Other companies with significant exposure in Italy are Suntech Power Holdings Co. Ltd. (NYSE: STP), Trina Solar Ltd. (NYSE: TSL), Yingli Green Energy Holding Co. Ltd. (NYSE: YGE), and Canadian Solar Inc. (NASDAQ: CSIQ). All will welcome the Italy decision mainly because it removes so much uncertainty about the level of support for solar in the country.
We previously noted the major features of Italy’s proposed changes. The major provisions include a cap on subsidy payments of 6-7 billion euros through 2016 and a target for installed capacity of 23,000 megawatts.
In our Alternative Energy Watch yesterday, we noted that Caris & Co. had downgraded First Solar and put a new price target on the shares of $139/share, largely a function of expected demand decreases in Europe. That opinion is not shared by all research firms. Auriga upgraded FSLR from ‘hold’ to ‘buy’ just two days ago and Argus has reiterated its ‘buy’ rating with a price target of $180/share.
In its research note, Auriga noted especially the certainty that now surrounds solar PV installations in Italy, and said that the new program could even have a positive effect on solar PV generation. First Solar, along with SunPower and Suntech, own project development businesses as well as solar PV manufacturing which positions these companies as best able to take advantage of Italian subsidies.
First Solar’s shares are up nearly 3% in very early trading, at $131.50, within a 52-week range of $100.19-$175.45. SunPower, which has agreed to an offer from Total SA (NYSE: TOT) to buy a controlling stake in the firm, doesn’t move on news like this. Suntech shares are up more than 1%, to $8.45, in a 52-week range of $7.05-$12.39. The Guggenheim Solar ETF (NYSE: TAN) is also up around 1.5%, to $8.11, within a 52-week range of $6.02-$9.34.
Paul Ausick
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