Exchange traded funds (ETFs) that provide exposure to the global solar energy sector rallied at Friday’s open after French energy giant Total (TOTF.PA) said it will purchase up to 60% of SunPower (NasdaqGS: SPWRA) for about $1.4 billion.
The offer at a big premium “is a validation for the solar sector and confirms the notion that valuations are compelling,” Jefferies analysts said in a note. SunPower shares rallied 40%.
“The take out is also validation for SunPower’s high efficiency technology, and gives Total the ability to realize a gain on its investment by keeping 40% of the company publicly traded,” they wrote. “We feel the stock can increase further, above the tender price, as a result of Total’s lowest cost of capital and project development business in 130 countries.”
SunPower ranks as a top holding in Guggenheim Solar ETF (NYSEArca: TAN) and Market Vectors Solar Energy ETF (NSYEArca: KWT) at between roughly 3% and 4% of assets.
Guggenheim Solar ETF gained more than 4% in early trading Friday. The ETF was up about 16% so far this year as of Thursday’s close.
Top holding First Solar (NasdaqGS: FSLR) rallied over 3% in early trading Friday
Guggenheim Solar ETF
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.