Solar will be a bright spot in ’08, Lehman analyst says

Vishal Shah, Lehman Brothers solar energy equity research analyst put out a report yesterday confirming my belief that the solar industry is still strong and growing.

After a strong finish in 2007, Shah writes that the solar sector will continue to remain one of the bright spots among other sectors plagued with macro concerns in 2008 and due to somewhat elevated valuations and already high growth expectations baked into street estimates he suggests a selective approach to the group with a focus on alpha (earnings momentum related stories) in the first half of the year.

Lehman is taking the position that 2008 will be a record growth year for the solar industry with shipments growing by at least 50% due to strong demand from Spain in the first half and Germany in the second half.

Also, Shah’s solar predictions for the year are as follow:

1) Earnings momentum trends will be mixed as street estimates already reflect over 50% growth in 2009 and availability of low cost polysilicon posing a possible industry challenge sometime in Q2
2) poly tightness will continue
3) poly prices will increase by another 20% in 2008
4) cell/module prices will decline by 5-10% in 2008
5) government support will continue to increase
6) efficiency improvement will drive margins
7) capacity ramps for some companies will accelerate
new business models will evolve
9) non-silicon costs will decline by 10%
10) new poly entrants’ supply trends will be mixed