* Companies eye stellar Q3, encouraging outlook for 2011
* Q-Cells, REC likely to miss EBIT estimates - StarMine
* Trina, SolarWorld likely to beat - StarMine
* Renewable Energy Corp to kick off season Oct. 27
By Christoph Steitz and Sarah McBride
FRANKFURT/LOS ANGELES, Oct 26 Ballooning demand in the world's largest solar power market, Germany, will help companies in the sector deliver stellar third-quarter results, analysts say, and they expect prospects for next year to brighten.
Large cuts in feed-in tariffs in Germany, Europe's largest economy, had fuelled concerns that next year could see a sharp decline in demand in the country that accounts for about half of the world market.
But recent analyst estimates suggest this may not happen and there will be continued strong demand for solar modules in Germany, arguing it will still be a stable investment despite further cuts.
Goldman Sachs, for example, expects the market to fall only slightly next year, with new installations of 7.5 gigawatts (GW) in solar capacity after an expected 8.5 GW this year.
Analysts said this would prompt companies to present more positive views about business next year, replacing the cautious stance major players have held so far on the outlook beyond the end of 2010.
"We're generally going to see some very strong results. There has been very strong demand coming from Europe," Matthew Page, co-manager of the Guinness Atkinson Alternative Energy Fund (GAAEX.O), said.
"Pricing is being quite firm. And I think the companies are likely to present a positive outlook for the next 12 months," he added. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on comparison of solar companies:
While earnings are expected to come in strong overall, some companies are still seen either falling short of analyst expectations or exceeding them, according to Thomson Reuters StarMine, which weights analysts' forecasts by their track record.
Above all, European companies are expected to surprise on the downside, StarMine shows, as Chinese players have been able to grab significant market share with their low-cost strategy.
"All the German installers seem to have (Chinese companies) as the top product they all want. They have generally been able to deliver the volumes people have asked for, and they haven't messed around their customers on prices," said Guinness Atkinson's Page.
StarMine shows that Norway's Renewable Energy Corp (REC.OL) -- which will kick off the sector's earnings season on Oct. 27 -- and German solar cell maker Q-Cells QCEG.DE are likely to release third-quarter earnings far below the Thomson Reuters I/B/E/S estimates.
REC's third-quarter earnings before interest and taxation (EBIT) could come in at 153 million Norwegian crowns ($26.57 million), according to StarMine, 37 percent below the 243 million crowns Thomson Reuters I/B/E/S estimate.
The database also shows that U.S.-based First Solar (FSLR.O), the world's No.1 solar cell maker, LDK LDK.N, and MEMC WFR.N are also likely to come in slightly below the Thomson Reuters I/B/E/S estimate.
Meanwhile, China's Trina Solar Ltd (TSL.N), SunPower SPWRA.O, Suntech STP.N, Yingli (YGE.N) and Germany's SolarWorld SWVG.DE could surprise on the upside.
Companies will also likely release upbeat comments about business next year, given the strong demand in Germany, where incentives to meet EU renewable energy targets have made the country the world's No.1 solar market.
Even though further cuts to the country's solar subsidy will likely affect volumes to some extent, analysts agree that investors will still pile in since feed-in tariffs offer a stable return to generators of solar power.
"I love the German subsidy programme because every year the world is going to come to an end when the German subsidy programme is revised. Every year as soon as the programme opens back up again it sells out like a rock star," Kevin Landis, portfolio manager at Firsthand Funds, said.
"It's like 'Groundhog Day' or something."
According to Thomson Reuters I/B/E/S, sales of most major solar players are expected to rise next year, even though some will only post modest increases.
"It's basically a completely subsidised industry, and the costs are way too high. As long as there are government subsidies, someone is going to be able to buy this stuff," said Ed Mitby, analyst at Van Eck Funds. (Graphic by Vincent Flasseur, editing by Anthony Barker)