Goldman starts U.S. solar sector with neutral

Goldman Sachs expects present factors like the euro volatility, declining subsidies in existing markets in Europe and financing uncertainty to resolve into a positive trend for the solar industry.

Analyst Mark Wienkes started First Solar Inc with a "buy" rating and named the stock his top pick, mainly on its low cost structure, while MEMC Electronic Materials Inc was initiated with a "sell" on its sub-peer margin recovery.

"In an increasingly competitive global market, solar panel manufacturers will need to lower costs by investing in R&D and capacity growth," Wienkes wrote in a note to clients.

Shares of solar power companies have been hit hard this year by a weak euro and concerns about Europe's stability, but demand has surged ahead of scheduled subsidy cuts in top markets of Europe.