LDK Solar (LDK), the Chinese solar-wafer maker, is building out its production capacity more quickly than expected, making it the latest solar name to post healthy earnings and raise its sales forecasts in recent weeks.
Shares jumped earlier this month after a stellar earnings report, and the firm's new announcement that it would see revenue of $2.8 billion to $3 billion this year sent the stock up 8 percent today in late trading. The company plans to build its output to around 1.2 gigawatts this year and 3.2 gigawatts by year-end 2010.
Oppenheimer & Co. analysts say the key will be making sure that there are no hiccups in production, as the aggressive build-out leaves less room for error "with wafer shipments likely nearly double next year."
The jump makes LDK just the latest solar name to rebound in the latest week. The Claymore/MAC Solar Index ETF has risen 8.6 percent in the past week.
Friedman, Billings, Ramsey analyst Mehdi Hosseini says the latest run-up in solar stocks shows investors are anticipating positive news at a September 1 trade show in Valencia, Spain. He says bulls are "already pounding their chests" after Suntech Power Holdings (STP) shares jumped more than 25 percent in the past five trading days after the company raised its 2008 revenue outlook to between $2.05 billion and $2.15 billion from a previous forecast of $1.9 billion to $2.1 billion and predicted that high prices for polysilicon used to make solar cells will come down next year.
One caveat: FBR's Hosseini cautions that good news from the industry won't help much if uncertain subsidy programs for solar in Spain and the United States turn out to be less generous than investors expect.