Although some of the solar companies have given optimistic guidance after their recent quarterly reports, specifically in reference to growth, companies like Trina Solar (NYSE:TSL), and others, show there is a strong weakness in margins, and that will continue to weight down the solar sector, and consequently, HSBC (NYSE:HBC) downgraded them from "Overweight" to "Neutral."
The price target was also lowered from $31 to $27.
Even with the downgrade and lowering of the price target, it does give room for some growth for Trina.
It seems this is a response to the aggressive expansion guidance in light of pressured margins, which of course could crush earnings in the industry.
Almost all the major solar competitors said the same thing, seeming to indicate they're worried and concerned about the economic conditions, but are ignoring them and pushing forward, based on demand, according to the companies.
The result will almost assuredly be consolidation, as these companies aren't in position to expand in a low margin atmosphere, and some of them will be weakened going forward, preparing the way for some to be taken over.
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