Citigroup’s Timothy Arcuri launched coverage of the solar sector with First Solar (FSLR) a Buy rating, SunPower (SPWR) with a Hold, and Evergreen Solar (ESLR) with a sell.
He believes there will be a shakeout in the industry with a sharp decline of 20% in 2009 and even more in 2010 because of subsidary programs in Germany and Spain.
Arcuri believes we’ll have a 60% over-supply of solar cells in 2009, with as much as 100% excess in 2010–those with cost advantages will stand out and those without will be screwed out of business.
First Solar is expected to reach cost effectiveness in 2012–two years before competitors–while maintaining gross margins above 50% through 2010. He set a price target of $450 on the stock.
