Solar: Raymond James Downgrades ENER, FSLR; Upgrades STP

Raymond James solar analyst Pavel Molchanov this morning cut his ratings on both Energy Conversion Devices (ENER) and First Solar (FSLR), while upgrading Suntech (STP). Meanwhile, Deutsche Bank analyst Eric Cheng also upgraded STP, while Brigantine Advisors analyst Ramesh Misra picked up coverage of FSLR, STP and SunPower (SPWRA).

“If you owned the best-performing U.S.-traded solar stock year-to-date Renesola (SOL), you�d be up 181%,” Molchanov notes in a research report. “If you had the worst-performingone � well, there are many candidates to choose from, and we try to be diplomatic, so let�s just point out that it would be a loss in excess of 40%. Quite simply, solar has been a stockpicker�s space in 2010, and we believe this will hold true in 2011 as well.”

Here’s a look a this morning’s various stock calls:

• ENER: Molchanov downgrades to Underperform, from Market Perform. “With ENER shares already down 53% year-to-date, this downgrade is, admittedly, rather late. That said, the outlook for amorphous silicon is looking more and more bleak. This simply does not seem like a [solar] technology that will be viable over the long run � a point on which our channel checks were unequivocal at last week�s Solar Power International conference.”
• FSLR: The Raymond James analyst downgrades the stock to Market Perform, from Outperform. “Whereas First Solar currently enjoys a virtual monopoly position in the global thin film market, we would be remiss if we did not point out the rapidly growing profile of CIGS thin film producers, as was very much on display at SPI last week,” he writes. “Virtually all are private, and none have First Solar’s scale as of yet, but when it comes to conversion efficiency some are giving First Solar a run for its money…Similarly, First Solar’s dominance in CdTe won’t last forever either, as at least one high-profile private competitor, Abound Solar, is aggressively scaling up production, supported by federal loan
  guarantees. Although First Solar remains a well-positioned blue chip in the solar space, the current valuation, along with a lack of visible catalysts and the aforementioned competitive pressures, has us moving to the sidelines for the time being.”
• FSLR 2: Brigantine’s Misra picks up coverage with a Buy rating. “With the strongest balance sheet in the industry, and an enviable record of solid execution, we believe First Solar is the most bankable supplier of solar modules and developer of solar projects,” he writes.
• STP: Raymond James analyst Molchanov raised his rating on Suntech to Market Perform from Underperform. “While we continue to be concerned about the company�s margin structure and balance sheet, the risk/reward has improved sufficiently for us to take a more neutral stance,” he writes.
• STP 2: Deutsche Bank’s Cheng raised his rating to Buy from Hold, asserting that “the stock now offers an attractive risk-adjusted reward return after a year of share under-performance and expect the company to secure new wafer capacity in the near term.”
• STP 3: Brigantine’s Misra is less bullish, launching with a Hold rating. “Suntech is the largest manufacturer of silicon based solar cells and modules,” he writes. “The company has increased production very rapidly over the last few years. However, to support this growth the company entered into multiple supply agreements for polysilicon wafers, and invested in some of these suppliers at a time when polysilicon was hitting all-time highs. We believe this could be a negative factor for Suntech for some time.”
• SPWRA: Misra starts the stock with a Buy rating. “The stock has been cheap due to accounting issues earlier in the year, and skepticism about the company�s ability to sell some of its Italian power projects; we think those concerns are over-done,” he writes.

In today’s trading:

• ENER is down 20 cents, or 4%, to $4.79.
• FSLR is down $3.08, or 2.1%, to $143.99.
• STP is down 47 cents, or 5%, to $8.97.
• SPWRA is down 34 cents, or 2.4%, to $13.75.