NEW YORK (Dow Jones)--The solar sector had a string of much-needed positive announcements Thursday, with a fourth-quarter beat by JA Solar Holdings Co. (JASO) and an acquisition by SunPower Corp. (SPWRA, SPWRB) among the factors helping push the sector higher.
These events, along with a major contract win for ReneSola Ltd. (SOL) announced Thursday, show that the near-term outlook for the sector could be improving, analysts said.
For weeks the sector has been trading mostly lower following news in January that Germany, a major customer for solar products, has proposed cutting subsidies to solar-power providers by 15%. Germany accounted for about half the demand for newly installed solar systems in 2009, Cowen & Co. analyst Robert Stone said.
Since that proposal emerged, the Claymore/MAC Global Solar Energy Index ETF (TAN), an exchange-traded fund that tracks many solar stocks, has fallen about 26%. But the fund was up 2.2% to $8.41 in recent trading.
JA Solar, which recently traded up 9% to $5.08, was one of the first solar companies to report this earnings season, and investors likely think the companyŽs top- and bottom-line beat bodes well for the rest of the sectorŽs upcoming results, Broadpoint AmTech analyst John Hardy said.
The beat came in part due to higher-than-expected shipments in the quarter, and the company also pushed up its guidance for 2010 shipments.
"Demand for our products continued to exceed our ability to produce," Chief Executive Peng Fang said on a conference call, according to a transcript provided by FactSet Research.
Fang said demand was not only coming from Germany, but also such places as Italy, France, Spain, Greece, Czech Republic and Korea, with new markets growing in places like Japan and China. Also, the U.S. is expected to be a significant market in 2010, Fang said.
Meanwhile, investors appear to also be excited about SunPowerŽs agreement to acquire European solar-plant developer SunRay Renewable Energy Ltd. for about $277 million, beefing up the U.S. solar panel makerŽs operations abroad.
Shares of SunPower were recently up 5.6% to $20.18 as the company said that when the deal closes it will gain a pipeline of solar photovoltaic projects that totals more than 1,200 megawatts in six countries, roughly six times the size of its current European installations.
China-based ReneSola was recently up 8.5% to $4.86, boosted by the announcement that it has signed an original-equipment manufacturing agreement to provide 600 megawatts of solar modules to an unidentified major global solar company over a period of three years.
Piper Jaffray raised its rating on ReneSola to overweight from underweight Thursday, citing the contract, improving fundamentals in the companyŽs core wafer business and recent underperformance by the stock.
CowenŽs Stone said the announcements Thursday are helping serve as a reminder that the market for solar products is becoming broader and more diverse, likely helping ease concerns about the Germany subsidy cut.
Other solar stocks gaining Thursday included U.S.-based First Solar Inc. (FSLR), up 4.5% to $114.23, and Canadian Solar Inc. (CSIQ), up 4.3% to $22.19.
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