The shares of a number of solar companies are rising after research firm Axiom wrote that the sector is benefiting from increased U.S. demand ahead of a price floor that could be imposed by the U.S. towards the end of the year. Axiom upgraded its rating on First Solar (FSLR) to Buy from Hold and raised its rating on Chinese solar company JA Solar (JASO) to Hold from Sell.

THESIS: Bankrupt solar company Suniva has petitioned the U.S. government to impose a minimum price of 78c per watt on all imported solar panels sold in the U.S., versus last quarter's price of 35c per watt, noted Axiom analyst Gordon Johnson II. President Trump is expected to decide the issue at the end of this year, although his decision could be delayed until January 2018, Johnson stated. In anticipation of the possible price increase and shipment delays that the price floor could cause, solar power project builders are buying large amounts of solar modules now, according to Johnson. As a result, module producers' Q2 results will probably beat expectations and their Q3 results could surpass expectations by a "material amount," he stated. Although Johnson has a "positive near-term bias" toward solar companies, he kept a Market Underweight rating on the sector.

FIRST SOLAR: Johnson increased his 2017 shipment estimate for the company to 2.7 GW from 2.2 GW and raised his 2018 shipment estimate for the company to 3.1 GW from 2.9 GW. He noted that the company would be exempt from the price floor. Citing increases in the company's average sales prices, he raised his 2017 EPS estimate to $1.21 from 31c. Analysts' consensus estimate is 56c. Johnson raised his 2018 EPS estimate for the company to 80c from 55c. Analysts' consensus estimate is 69c. He increased his price target on the shares to $51 from $43.

JA SOLAR: The company's Q3 EPS will come in at 21c, versus the consensus estimate of a (6c) per share loss, Johnson predicted. Johnson estimated that the company's module business is worth $7 per share and increased his price target on the name to $7 from $3, but added that the standing $9.69 per share take private offer from its CEO caps the stock's upside.

CANADIAN SOLAR: The China-based company will benefit from selling solar assets at a profit as well as from temporarily higher module prices, wrote Johnson, who kept an $18 price target and a Buy rating on the shares.

JINKOSOLAR: The company's Q2 EPS and Q3 EPS will beat expectations by a significant amount, driven by higher U.S. module prices, Johnson believes. The analyst, who says that the company's module business is worth $28 per share, keeps a Hold rating on Jinko shares.

LOSE/LOSE FOR CHINESE COMPANIES: Johnson believes that Chinese solar companies will face a lose/lose scenario after Trump decides the price floor issue. If the floor is approved, demand for Chinese modules in the U.S. will drop significantly, causing global prices to decline, he stated. If it's not approved, demand will return to normal levels, causing prices here to drop significantly, Johnson believes.

PRICE ACTION: In morning trading, First Solar climbed 4.5%, JA Solar rose 3%, Canadian Solar gained 3% and JinkoSolar surged 8%.