Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of photovoltaic products manufacturer Yingli Green Energy
So what: In today's note, Deutsche Bank analyst Vishal Shah noted that inventory levels in Germany are near record lows and that this inventory shortfall, coupled with a 15% subsidy cut which is looming in July, could be the catalyst to get companies to jump on the remaining inventory. Shah also noted that with Wall Street estimates already very low, the possibility of a sentiment upside exists when solar companies report in the fourth quarter.
Now what: However, not everyone agrees, including me and Mizuho Securities analyst Paul Clegg, who claimed that a subsidy cap in Germany is a poor reason for buying into strength. It's clear that solar power is the future; unfortunately, the bottom line as of right now shows that there are simply too many companies and not enough demand. Yingli appears as though it could be a winner once the sector rights itself, but considering it has very little visibility on pricing and demand, I'd have to recommend passing at these levels.
Craving more input? Start by adding Yingli Green Energy to your free and personalized watchlist so you can keep up on the latest news with the company.
