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Solar Stocks to Fall Further as Bubble Bursts: BofA Analysts
CNBC.com | March 08, 2012 | 10:03 AM EST

Prospects for the already battered solar stocks are getting darker as analysts anticipate another round of price declines due to virtual end of subsidies to the sector.

“The mini-bubble resulting from the rush to cash in on solar subsidies in European and U.S. markets is ending, as feed-in tariffs drop in Europe while loan guarantee and tax credit programs tighten up in the U.S.,” says a new report from Bank of America Merrill Lynch.

The MAC Gloabl Solar Energy index that tracks the industry performance slid 26 percent in just one month. And one of the sector biggest names — First Solar— has dropped 45 percent over the same period.

Bank of America Merrill Lynch analysts see these declines continuing as the industry now faces oversupply and product pricing issues.

“We expect price declines in panels and upstream materials to resume as manufacturers chase market share and struggle to cope with excess capacity,” says the report.

Chinese manufactures have already been willing to accept lower prices to gain market share, and now aggressive pricing is expected to show up in other markets as well.

And solar companies see competition intensifying.

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