UPDATE: Barclays Initiates Coverage on JinkoSolar

In its April 8 Morning Research Summary, Barclays initiated coverage on JinkoSolar JKS with an Overweight rating and a $51 price target.

Barclays analyst Jamie Yeh has named JInkoSolar the firm's top pick for the solar sector calling it a "cost leader among peers." Yeh also noted that JinkoSolar's "vertical integration model with wafer and downstream should help shield it from rising poly/water costs."

Looking at the sector as a whole, Yeh expects >20 percent shipment CAGR into 2016E, as well as "stable pricing" and "balanced supply and demand". Yeh provided two reasons for these expectations:

1. Demand more tangible: With prices having declined 80 percent since 2011, solar energy has become substantially more affordable compared with retail electricity prices. On this, Yeh notes that the "economic powerhouses" the U.S., China, and Japan have been promoting solar as both a way to reduce air pollution and move away from nuclear power.
2. Greater supply discipline: We expect a regulated supply increase as the Chinese government discourages unqualified entrants and banks are not willing to fund
   capacity expansion, while existing players now have better visibility on demand and will focus on their downstream projects.