SolarCity stars in scorching solar sector as tax break saved
5:24 pm ET December 16, 2015 (MarketWatch)
Share
Print
By Claudia Assis, MarketWatch
Congress poised to extend 30% tax credit on solar installations through 2019
Several solar-energy stocks scored double-digit gains Wednesday after Congress neared an extension for a key tax credit for renewable energy.
Shares of SolarCity Corp. (SCTY) rose 34% in the session, the largest daily gain in the company's history, to the highest closing price since early August. Shares of SunEdison Inc. (SUNE) rose 25%, while shares of First Solar Inc. (FSLR) gained nearly 10%, the biggest one-day increase since early November. Shares of SunRun Inc. (RUN) were up 23%, their best showing since late August.
The tax credits solar and wind power were set to end next year. But a spending bill approved late Tuesday in a congressional quid-pro-quo would extend them for five years, including extending the current 30% credit until 2019. The bill must still be approved by the Senate and by the House, with lawmakers likely voting on it later this week.
Solar companies stand to benefit the most from a credit extension, analysts at Credit Suisse said in a note Wednesday. If it passes, the bill "should solidify the ability to grow profitably in most markets" in which they operate, the analysts said.
Even China-based solar-panel makers such as JinkoSolar Holding Co. Ltd. (JKS), Trina Solar Ltd. (TSL), JA Solar Holdings Co. (JASO), and Yingli Green Energy Holding CO. (YGE) would benefit, thanks to improved demand outlook in the U.S., the Credit Suisse analysts said.
If granted, the extension also reduces the risk of oversupply in 2017, "a big concern for several companies and investors in the solar sector," analysts at Deutsche Bank said.
Companies also had been rushing to complete solar projects before the 2016 deadline, which cut down on their margins. Deutsch Bank analysts said margins should improve as those projects get pushed back into 2017, and added that companies with the most exposure to the residential solar U.S. market -- SolarCity, SunRun, and Vivint Solar Inc.(VSLR) -- would benefit the most.
First Solar would also be a "huge beneficiary" as the utility-scale market was expected to decline the most in a post-tax-credit environment, they said.
-Claudia Assis; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
