Broadwind Energy (BWEN) remains one of the few wind energy players and is poised to benefit from a decrease in competition as many companies gave up on the space and the U.S. government decided to extend the PTC for wind, says Christopher Blansett, Senior Equity Analyst at J.P. Morgan Chase & Co.
“Many participants in the wind sector are moving on, rationalizing the weak demand outlook and making the decision that they have to exit before the actual end of the line occurs and the end of the PTC subsidy. I think those companies that continue to sell into the U.S. wind sector in 2013 are probably going to have incrementally less pricing pressure,” Blansett said.
Blansett says the reduced competition among wind tower companies will also result in less pricing pressure and higher margins, and he says the wind energy industry has recently seen antidumping measures which will further pricing power for BWEN, even if demand were to remain low.
“Some of the low price foreign suppliers out of Vietnam and China are not going to be as impactful in 2013 as they have been in the past. So even though Broadwind may not have nearly as good a year as last in 2012 and will likely see a significant demand decline in wind towers on a unit basis, the company may see incrementally better margins due to a reduced level of competition,” Blansett said.
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