* Ups Yingli to outperform, Suntech to perform
* Says less optimistic about SunPower, First Solar
* Cuts Canadian Solar to perform
April 23 (Reuters) - Oppenheimer raised Chinese solar companies YingliGreen Energy Holding Co Ltd <YGE.N> and Suntech Power Holdings CoLtd <STP.N>, and said the two had most upside from incrementalcost reduction.
As long as solar costs lie above grid parity,demand for solar is highly elastic, and return for shareholders issolely dependent on cost execution, the brokerage said.
The brokerage raised Yingli to "outperform" from "perform," and upgraded Suntech to "perform" from "underperform."
It maintained an "outperform" rating on Solarfun Power Holdings Co<SOLF.O>, but downgraded Canadian Solar <CSIQ.O>, which hadsaid first-quarter margins would fall below its prior view, to"perform" from "outperform."
"What to do if demand elasticity is your biggest frenemy? Respond with cost," Oppenheimer analysts wrote in a note to clients.
With average selling prices (ASP) set to fall to about $1.25 per watt,companies with the lowest cost structure today, and the strongesttailwinds to get to $1.00 per watt costs, make the best investmentcase, the brokerage said.
Oppenheimer, however, said it was lessoptimistic about companies that relied on ASP premiums, and were lesscompetitive in utility-scale projects in China and the United States,like SunPower <SPWRA.O>, or those that were susceptible to moremargin shortfalls, like First Solar <FSLR.O>. (Reporting byAdveith Nair in Bangalore; Editing by Aradhana Aravindan)