How could so many analysts (Goldman being just one) have gotten Meyer Burger and other solar equipment manufacturers so extraordinarily wrong this year?
Meyer Burger has soared since reporting record 2010 results and not just because of a short squeeze. True, Meyer Burger’s performance reflects company-specific strengths: market leadership, excellent execution, and dynamic strategic ‘thinking’. Meyer Burger focuses on ways to raise its competitive advantage, such as dominating the entire supply chain rather than just parts, and aiming for 95% efficiency, which is impossible for competitors who cut corners. In addition Meyer Burger is cross-selling throughout Asia, which now accounts for 76% of its sales, and is penetrating emerging markets including India that protect local players.
But the real reason analysts miscalculated is because solar costs are still falling (while oil and nuclear costs are rising). Lower costs stimulate demand . Constant cost cutting is the way for Meyer Burger and other solar managements to bring grid parity closer. This is clearly the best strategy to prepare for the end of the FIT (feed -in tariff). Yet, every January since 2008 analysts have predicted a solar cycle downturn. But the world-wide solar market grew a further 139% y/y to 18.3GW in 2010. Misperceived price elasticity of solar must be wishful thinking on the part of oil majors.
Expect the Japanese nuclear disaster to make analysts even more wrong this year than last!