The shares of two Chinese names are reviving the solar sector this morning.
LDK Solar (LDK) is up more than 20 percent today after second-quarter earnings more than doubled to $1.29 a share from 45 cents a year ago. Wall Street was expecting profits to fall to 42 cents, so the beat is a huge one. Operating profit rose to $100.3 million from $52.5 million last year, despite the high cost of polysilicon, which LDK uses to make its products. The company also raised its annual revenue estimates by a whopping 50 percent from the midpoint between earlier forecasts to $1.65 billion to $1.75 billion. Analysts at ThinkPanmure, who initiated coverage on LDK this week with a $50 price target, raised their 12-month price target to $55 on the back of the earnings report. Shares traded near $41 at midmorning.
JA Solar (JASO) also saw revenue more than double in the quarter to $180 million from $67 million a year ago, but the solar cell maker turned in earnings of 14 cents a share, a penny below analysts' estimates. Shares still jumped more than 8 percent in early trading as investors look past a mixed quarter toward 2009, where the company sees revenue 23 percent above current expectations, according to AmTech analyst John Hardy.
So far, it's generally been a respectable quarter for the solar industry, which has struggled a bit this year after a stellar 2007 on questions over the fate of energy subsidy programs that support the industry and the high price of raw materials. Shares of the Claymore/MAC Global Solar Index (TAN), off about 16 percent since mid-April, jumped nearly 3 percent.
Uncertainties surrounding subsidies and polysilicon costs will continue, but sales have picked up through the summer at a host of solar names. It remains to be seen whether that will be enough to offset investor jitters as the soaring price of oil that spurred interest in all things green starts to cool.