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 JinkoSolar (JKS 6.14%) jumped more than 12% during intra-day trading after analysts at Credit Suisse upgraded the Chinese solar company from "Neutral" to "Buy," while raising its price target from $22 to $32 per share.
So what: Even after the pop, that's a 28% premium to the stock's current price around $25 per share. To justify the upgrade, Credit Suisse is citing both valuation -- assuming around $3.58 in earnings per share in 2014 -- and recent favorable policy changes in China.
Now what: Going forward, Credit Suisse expressed renewed confidence in the strength of Chinese solar demand, thanks largely to the fact that "the government has actually made FiT payments through June 2013 after previous 1+ yr delays, and plans to make monthly FiT payments starting in October 2013."
What's more, they note, the Chinese government has also banned new capacity expansions, which creates "a slight barrier to entry" in the Chinese solar market. This, in their view, could ultimately force an industry consolidation to the benefit of Tier 1 producers like JinkoSolar, which could enjoy the resulting opportunity to acquire smaller producers' assets at a significant discount.
