Evergreen Solar (ESLR) shares in the $5 range

Evergreen Solar, Inc. (NASDAQ:ESLR) is looking like a prime Value Play at current levels. Evergreen shares have been cut in half since late June and hitting new 52-week lows all week.  At a time like this, their catch phrase really means something - Think Beyond. 

When will the company’s patented string ribbon technology finally manage to rise up, gain artificial intelligence and enslave the human race? That and many more questions will be answered in this ground-breaking analysis. Think Matrix Revolutions when Neo finally confronts the mother A.I. being, Evergreen's just a step away (not really, but what the hell):

ESLR dropped like a rock Monday, shedding a mind-blowing (and portfolio crushing) -20%.

If you’re long ESLR today, you’re feeling the pain, along with the rest of the solar stocks.

Collins Stewart analyst Dan Ries this morning notes that the Euro has weakened 6% against the dollar since mid-August; the current rate of about 1.42 Euros to the dollar is down 10% from a Q2 average 1.56. That’s trouble for the solar industry, which as Ries notes generates 70% of its sales in Euros. (Thanks to lucrative subsidies, Germany and Spain remain the largest single markets for solar products.) Making things worse, Ries notes, is the fact that most U.S.-listed solar stocks have costs denominated in dollars or Chinese RMB. “With ASPs declining while costs stay constant, there will likely be pressure on gross margins and EPS,” he writes.

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Ries notes that solar stocks are already down about 24% this month, and that while he is lowering his estimate to account for the currency factor, “we do not want to perceived as having a negative outlook at this point, as we believe the current share prices of solar stocks reflect a far worse demand environment than we believe is likely to occur” in 2009. He adds: “We believe we are near a bottom in solar shares!”

Ries today cut his revenue and EPS estimates today for Canadian Solar (CSIQ), First Solar (FSLR), Solarfun (SOLF), Suntech (STP) and Yingli Green Energy (YGE). The largest changes were for FSLR and CSIQ, he notes. For FSLR, his 2008 EPS drops to $3.94, from $4.12, while ‘09 goes to $7.96 from $8.26. For CSIQ, he goes to $2.60 from $2.81 non-GAAP for this year, and to $4.14 from $4.46 for next year.

Calyon Securities analyst George Kotzias this morning to cut his price targets this morning on Energy Coversion Devices (ENER), Evergreen Solar (ESLR), First Solar, SunPower (SPWR) and MEMC Electronic Materials (WFR), although he maintains Buy ratings on all of those stocks.

Kotzias’ new target for ENER is $102, down from $85. For ESLR, $12, from $17. For FSLR, $302, from $375. For SPWR, $92, from $100. For WFR, $56, from $70.

ESLR One Year Chart:

The entire Solar Sector is currently getting its ass handed to it, in spades.

Now, most Analyst views are complete garbage, but Lehman Brothers analyst Vishal Shah actually has some worthwhile comments on the Solar Sector at large. He said the recent solar sell-off seems to have been partly triggered by an overall market and commodity sector drop and a misinterpretation of some recent comments made by a solar executive.

In a note to clients, Shah said comments by SunPower Corp. Chief Executive Tom Werner about 2009 price declines were not new and were consistent with estimates provided during the company's second-quarter earnings call.

The Lehman analyst maintains a "Positive" rating on the solar sector but said he expects continued volatility until there is some resolution on Spanish and U.S. market incentives.

"We expect 2009 to be a transition year for the solar energy sector as government incentives, which have been the key growth driver, expand from two to three markets to multiple markets over the next three years," Shah wrote.

Several analysts who attended last week's European PV Solar Energy Conference in Spain have cited concerns about strong 2009 demand further exacerbating the tight polysilicon supply environment.

Shah said many solar companies have provided aggressive guidance for 2009 on the assumption that polysilicon will become more readily available. But he predicts the tight supply will continue and companies without relatively long-term contracts will be at a disadvantage.

I personally think that this uncertainty in the Solar Sector provides a great entry point. With the election coming up, and a new president coming into power, it’s certainly a win-win situation. McCain’s energy policies can’t get any worse than Bush’s (I would hope) and although he’s partial to Nuclear Power, I’m sure he would set aside part of the budget for alternative energies such as Solar.

Obama, in a speech on September 6th, stated:

“We need a real policy. Now, part of that can include increasing domestic oil production. And so we should look for reserves offshore and if we can identify them and they’re profitable and they can help relieve some of the pressure, that’s great,” Obama said. “But understand that we’ve only got 3 to 4 percent of the world’s oil reserves, and we use 25 percent of the world’s oil. So instead, what we should be doing is investing in alternative energy.”

Obama proposes a $15 billion annual investment in alternative energy and also called for more public transportation like high-speed trains.

“We can create 5 million new jobs in solar, wind, biodiesel, hydro, geothermal. All those jobs are well-paying jobs and they can’t be outsourced,” Obama said. “We can create a car that gets 100 miles a gallon, or 150 miles a gallon. But the problem is right now it’s being created in Japan instead of here in the United States.”

P.S. – if you didn’t already know, ESLR’s robots have already enslaved the human race, and we’re already in the Matrix. 

Hang in there and consider the bounce play in ESLR and other solar stocks if they continue to fall.