Less than a week after predicting JA Solar Holdings Co., Ltd. (ADR) JASO 4.48% would report its first earnings loss in four years in third quarter, Axiom analyst Gordon Johnson added JA Solar to his list of solar stock short ideas. In a new note to clients Tuesday, Johnson downgraded JA Solar to Sell and reiterated his belief that the recent surge in U.S. PV prices could soon swing back in the other direction.
According to Johnson, much of the tailwind in solar stocks of late have come from speculation regarding President Donald Trump’s investigation into solar imports.
Back in April, Suniva filed a U.S. International Trade Commission petition asking for President Donald Trump to be granted permission to restrict solar panel imports under the authority of Section 201 of the Trade Act of 1974. Section 201 was intended to allow the president to place restrictions on imports if they pose a threat to national security.
In its petition, Suniva suggested Trump set minimum import prices of 78 cents per watt for modules and 40 cents per way for cells for at least the next four years.
Solar stocks have been heating up on Section 201 rumors in recent months, with the Guggenheim Solar ETF TAN 0.36% up more than 20 percent since late May.
“This upside, we believe, is a byproduct of pundit views that Chinese module vendors would benefit from a temporary U.S. solar bull market brought about by IPPs inventorying modules/parts in an attempt to get ahead of the Trump administration’s section 201 investigation into imported solar modules (where an adverse outcome could lead to imported module prices as high as $0.78/W, vs. prices at ~$0.35/W in 1Q17),” Johnson wrote.
Johnson believes Chinese solar module vendors are now in a lose-lose situation in which they will either be shot out of the U.S. market or be forced to deal with deflation in U.S. PV prices if Trump opts not to act.
As a result of the precarious situation in the solar market, now has…
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