UPDATE: Goldman Sachs Downgrades JA Solar to Sell on Unsustainable Margin Strength

In a report published Wednesday, Goldman Sachs analyst Amy Song downgraded the rating on JA Solar Holdings Co. JASO from Neutral to Sell, and lowered the price target from $4.50 to $4.20. In the report, Goldman Sachs noted, “We think the margin strength enjoyed by JA Solar during 1Q13, which was driven by its shipments to high-ASP markets like Japan, could be short-lived amid tariff uncertainty. Under our base-case scenario analysis of the current tariff dispute, we believe any potential tariff scheme could limit EU penetration for Chinese cell/module makers and increase pricing competition in other markets, while the cost structure might even hike slightly due to a domestic poly tariff scheme, and this is likely to result in another structural down-cycle for export-focused midstream makers.” JA Solar Holdings Co. closed on Tuesday at $7.34.