A Citi Investment Research analyst began covering shares of U.S.-based solar power companies Friday, saying First Solar Inc. is one of the few companies that will weather sharp decline in prices.
Timothy Arcuri expects a large oversupply of solar power cells in 2009 and 2010, which will lead to lower prices and a shakeout in the sector. Companies with cost advantages will trade at much higher levels than their rivals, he said.
Arcuri rated First Solar shares at "Buy," predicting that by 2012, the company will be able to produce energy that costs the same as grid-produced electricity. First Solar's rivals will need another two years to reach that important milestone, he said.
The analyst set a price target of $450 per share, and in premarket electronic trading, the stock gained $7, or 2.5 percent, to $282.80. Shares finished at $275.80 Thursday, and Arcuri's price target implies they will rise 63.2 percent over the next year.
He rates SunPower Corp. stock "Hold," saying the company has lower silicon costs and a more integrated business than its rivals, but may struggle in a commodity market. He set a price target of $105 per share, but the stock fell 68 cents to $83, from Thursday's final price of $83.68.
Arcuri set a "Sell" rating and an $8 price target on shares of Evergreen Solar Inc., and said Evergreen has heavy capital needs. The stock declined 36 cents, or 4 percent in premarket trading, to $8.54. Shares closed Friday at $8.90.
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