Cover Your Solar Shorts! -Piper Jaffray (FSLR, LDK, YGE, SOLF)

Piper Jaffray is out with a research note this morning recommending investors buy the solar sector.

The firm's report cites the German news agency, DPA, as reporting that the German Government reached a final agreement on reductions in the country's feed-in tariffs for solar and wind devices last night. According to Piper's contacts, the agreement will be made public over the weekend and implemented into the EEG bill on Monday. Additionally, Piper also received indications that the bill will likely "be voted through parliament as early as Friday next week rather than end of June."

Piper expects the feed-in tariff reductions to be 8% for 2009, 8% for 2010 and 9% for 2011 and onwards. These revisions compare to previous rates of 9.1% for '09, 7% for '10 and 8% for '11+. The firm notes that the media may be negative on this change, as players may call for further reductions, but Piper believes further changes will be highly unlikely.

Shares of solar companies are certainly reflecting this announcement this morning:

• First Solar (Nasdaq: FSLR) - up $18, or 7% to $270.50
  
• Evergreen Solar (Nasdaq: ESLR) - up $0.39, or 3.8% to $10.59
  
• LDK Solar (NYSE: LDK) - up $1.23, or 2.9%, to $43.85
  
• Solarfun (Nasdaq: SOLF) - up $1.04, or 5.2%, to $21.21
  
• Yingli Green Energy (NYSE: YGE) - up $1.14, or 5.7%, to $21.09
  
• Suntech (NYSE: STP) - up $2.78, up 6.9%, to $43.30
  
• SunPower (Nasdaq: SPWR) - up $4.57, or 6%, to $80.57

Today's announcement comes as a relief to investors long in solars as the sector had a tough day on Wall Street yesterday despite a bullish crude inventories number. First Solar stock was down about $20, or more than 7%, Evergreen Solar was down about a buck, or 9%, Yingli was down about$2.30, or 10%, LDK was down $1.73, or 4% and Solarfun was down about $1.75, or 8%.

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