Goldman Sachs reiterates JinkoSolar stock Sell rating on margin pressure By Investing.com

Goldman Sachs reiterated a Sell on JinkoSolar with a $19 price target after the company’s Q4 2025 results missed both Goldman and FactSet estimates. Revenue fell 34% year-over-year to $9.6 billion, gross margin dropped to 3.13% over the last twelve months, and the company reported a $9.26 per share loss. 2026 shipment guidance implies a further decline, with Goldman warning that margin and ASP pressure could persist into Q1 2026.

Analysis

The key read-through is that this is no longer just a JKS story; it is a balance-sheet-and-capacity-discipline test for the entire low-cost Chinese module cohort. When pricing falls below cash cost for an extended period, the marginal losers are the second-tier manufacturers with weaker utilization and higher leverage, while the survivors gain share only after a brutal working-capital reset. That means any “industry rationalization” thesis is inherently delayed: the first-order pain shows up in earnings now, but the second-order winners may not emerge until forced shutdowns or equity dilution hit over the next 2-4 quarters.

The market is likely underestimating how long subnormal profitability can persist even if shipments stabilize. In solar, guidance cuts often matter more than reported shipment beats because they telegraph procurement behavior from utility customers and traders; a lower forward volume outlook usually signals that channel inventory is still not clean. If ASPs merely flatten instead of rebound, the base-case is continued margin compression into the next reporting cycle, which keeps consensus estimates too high and opens the door to another leg lower in high-beta renewables.

The contrarian angle is that the stock can look cheap on normalized earnings precisely when normalized earnings are not yet available. Value screens will continue to flag JKS as inexpensive versus replacement-cost and book metrics, but that is only actionable if financing risk is low and industry consolidation is visible. Absent a confirmed capacity closure wave, any rally is likely to be sold by funds using it as liquidity to de-risk broader China/renewables exposure.

For GS, the marginal read is reputational rather than P&L: reiterating a Sell while the stock is weak reinforces the market’s willingness to trust near-term margin pressure calls. If the next quarter confirms sequential ASP deterioration, this becomes a cleaner short-the-rally setup than a standalone earnings short, because the asymmetry is better once positioning resets.

Key Decisions for Investors

• Maintain / add to short JKS on any 5-8% rebound over the next 1-3 weeks; use a tight stop above the pre-earnings gap if you need event-risk control. Risk/reward is favorable because upside likely requires a real ASP inflection, while downside can extend quickly if guidance cuts continue.
• Pair trade: long TAN / short JKS for 1-2 months only if you want cleaner beta exposure to a possible policy-led renewables bounce while isolating idiosyncratic execution risk. The short leg should outperform on any evidence that China module pricing remains weak.
• Avoid catching the falling knife in lower-quality Chinese solar suppliers; use JKS weakness as a proxy hedge against the broader solar supply chain until there is evidence of forced capacity exits. This is a better risk-managed expression than buying the full basket.
• If JKS rallies on sentiment alone, buy short-dated puts or put spreads into the move rather than outright shorting strength. The setup favors volatility monetization because the fundamental catalyst path is still downward over the next 1-2 quarters.
• Watch for a 2-quarter horizon trigger: if gross margins fail to reaccelerate by the next report, reassess for a deeper structural short and consider rotating into names with stronger balance sheets and downstream exposure.