Short Sellers Retreat From First Solar and SolarCity (FSLR, SCTY, SPWR)
Among the leading U.S. solar-related stocks, First Solar (NASDAQ: FSLR), SolarCity (NASDAQ: SCTY) and SunPower Holdings (NASDAQ: SPWR) saw significant declines in the number of shares sold short in the first two weeks of April.
Short sellers also shied away from RGS Energy between the March 31 and April 14 settlement dates. But short interest in Advanced Energy Industries, GT Advanced Technologies and SunEdison increased during the period.
In addition, the number of U.S.-listed shares (or ADSs) sold short of foreign-based companies China Sunergy, Hanwha SolarOne and Trina Solar increased by a double-digit percentages, while in JA Solar Holdings, JinkoSolar and Yingli Green Energy they grew somewhat. But short interest in Canadian Solar and ReneSola shrank in the period.
Here is a quick look at how First Solar, Solar City and SunPower have fared and what analysts expect from them.
Short interest in this Tempe, Arizona-based company fell more than 16 percent in the period to around 10.21 million. That took back a 15 percent rise in the previous period. The number of shares sold short represents about 14 percent of the float. It would take about two days to sell out all short positions.
Analysts are looking for strong revenue growth from First Solar for both the current quarter and the full year. The company has a market capitalization of almost $7 billion. The forward earnings multiple is less than the trailing price-to-earnings (P/E), and the operating margin is greater than the industry average.
The consensus recommendation of the analysts surveyed by Thomson/First Call is to hold First Solar shares, and it has been for at least three months. The current share price is higher than the analysts' mean price target, meaning they see no upside potential at this time.
The share price is more than 19 percent higher year to date but in the same neighborhood as it was a month ago. It is still well above the 50-day moving average. The stock has outperformed the likes of Linear Technology and Sharp, as well as the Nasdaq and S&P 500, over the past six months.
Short interest in this provider of solar energy systems to residential and commercial customers retreated more than 10 percent to about 9.60 million shares. That was the lowest number of shares short since mid-February, and it represents more than 23 percent of the float. The days to cover was less than two.
This San Mateo, California-based company faced lawsuits during the period related to its financial reporting. SolarCity has a market cap of about $5 billion, but it does not offer a dividend. Note that both the return on equity and the operating margin remain in negative territory.
Six of the 10 polled analysts recommend buying shares, and only one rates the stock at Underperform. A recent pullback as left plenty of headroom for the stock, relative to the analysts' mean price target. But shares have traded higher than that consensus target as recently as mid-March.
The share price has fallen almost 25 percent in the past six weeks, dropping well below the 50-day moving average but so far still about the 200-day moving average. Because of the pullback, the stock has underperformed not only the Nasdaq and the S&P 500 in the past six months, but also smaller competitor RGS Energy.
Shares sold short in this integrated solar products and services company dropped more than 17 percent in early April to almost 12.96 million. That was the lowest short interest so far this year, though it was still more than 30 percent of the float. The days to cover fell to less than four for the first time this year.
Headquartered in San Jose, California, this company has a market cap near $4 billion, and in early April it announced a deal to help finance its residential solar lease program. While the company has a long-term EPS growth forecast of about 30 percent, its return on equity is less than 10 percent.
The consensus recommendation of 15 analysts polled is to hold shares, and it has been for at least three months. A move to the analysts' mean price target would represent a gain for shareholders of more than seven percent. But that consensus target is less than the 52-week high set in early March.
The share price surged more than 27 percent in the past week, rising above the 50-day moving average and more than making up for a pullback in early April. The stock has underperformed competitor First Solar but outperformed the broader markets over the past six months.
At the time of this writing, the author had no position in the mentioned equities.
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