Lazard Defends Solar, On Pullbacks (ENER, ESLR, FSLR, SPWR, STP)

Lazard Capital Markets has issued a defense of the solar power companies today.  Analyst Sanjay Shrestha noted that these stocks can be bought on dips.  It is no secret of late that calling these volatile is an understatement.

Shrestha’s report states: "The past few months have seen unprecedented volatility in the solar sector, driven by macro energy dynamics, outstanding earnings performance and outlook from select companies, a number of industry events that saw record investor attendance, and significant capital inflow into the sector….. the sector has changed from a cottage industry into a mainstream industry with a fully evolved value chain on a global basis. The sector has enjoyed an increase in market capitalization from $9 billion to about $45 billion in less than 18 months….."

He also adds, "We believe it is important to take a longer-term view despite somewhat loud near-term noise, and to buy high-quality names on any meaningful dips…. a supply/demand imbalance will likely materialize by 2009, raising the importance of accelerating growth in the US market…"

This notes specifically that SunPower (NASDAQ:SPWR), First Solar (NASDAQ:FSLR), and SunTech power (NYSE:STP) are opportunities where investors are encouraged to take positions in on any weakness.  It notes that Energy Conversion Devices (NASDAQ:ENER) and Evergreen Solar (NASDAQ:ESLR) are turnaround stories with attractive risk/reward.  Evergreen Solar’s target was lifted from $12 to $15 to reflect 25X based on 2009 estimates by Lazard in this note.  Here is the Lazard matrix today:

Ticker  Rated      $PRICE     TARGET
ENER   BUY        $29.22          $40
ESLR    BUY        $12.92          $15
FSLR    BUY         $188.07       $225
SPWR   BUY        $108.42       $185
STP       BUY        $59.70          $75

Here is yesterday’s "The Business Day in Global Warming" where 24/7 Wall St. covers the alternative energy news announcements and developments that affect public companies whether they are green or dirty.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the more detailed 24/7 Wall St. subscriber-based Special Situation Investing Newsletter which covers buyouts, reorganizations, spin-offs and more; he does not own securities in the companies he covers.