Deutsche Bank Says Solar's Link To Oil Is Overblown

Deutsche Bank issued a solar industry update Monday and felt the recent sell-off is “overdone."

Analyst Vishal Shah commented that “Solar stocks have lately been under significant pressure due to concerns over oil price weakness. We believe solar fundamentals are driven mostly by government policies and natural gas prices in most major markets and see almost no impact on near term demand environment as a result of recent oil price volatility.”

Shah expected demand in markets such as US, India, China to accelerate from 2015 and suggested buying the following on near-term weakness:

Trina Solar Limited (ADR) TSL
SunEdison Inc SUNE
SolarCity Corp SCTY
SunPower Corporation SPWR
Vivint Solar Inc. VSLR

Shah concluded, “While all solar companies are generally insulated from oil price volatility, companies with exposure to US residential solar market (SCTY, VSLR) are likely least impacted as we do not see US retail electricity prices declining in the near term. Meanwhile, improving financing costs and greater penetration in new states could continue to drive positive demand momentum for SCTY, VSLR fundamentals, in our view.”

As of Tuesday morning solar stocks were mixed, however, SunEdison Inc was surging higher, trading at $21.08, up 2.13 percent.