Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of JinkoSolar Holding Co. Plunged 11% Today

By Travis Hoium – May 26, 2017 at 4:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Two downgrades hit this solar manufacturer ahead of a big earnings report.

What happened

Shares of solar-manufacturing giant JinkoSolar Holding Co. (JKS -0.69%) plunged as much as 11.1% after being downgraded by two analysts. At 3:30 p.m. EDT, shares were still trading down 10.5% on the day.

So what

Analysts at Morgan Stanley downgraded JinkoSolar to underweight and put a $16.40 price target on the stock; they expect margins and revenue to be under pressure as solar-module prices decline. Citigroup also downgraded the stock to a sell rating and put a $15 price target on it, down from a previous target of $15.50.

Solar panels at a large installation on a sunny day

Image source: Getty Images.

These downgrades come ahead of the company reporting earnings on June 5. Competitors have reported gross margins down significantly from a year ago, and are lucky to be at breakeven.

Now what

The problem for JinkoSolar, and other commodity solar competitors, is that manufacturing expansions with newer, less expensive equipment are coming online in the next year, and the products those competitors will make are higher-efficiency than what JinkoSolar currently makes. That'll put further pressure on solar-panel sale prices as well as margins.

I don't think this new discount is a buy sign for the stock; right now I would be wary of JinkoSolar, and all Chinese competitors in solar, given the poor earnings trends.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

JinkoSolar Holding Company Stock Quote
JinkoSolar Holding Company
JKS
$47.81 (-0.69%) $0.33

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.