CORRECTED: GT Solar hopes sun will come out next week

(Corrects earnings year used for P/E calculation in ninth paragraph to 2008) NEW YORK (Reuters) - GT Solar International Inc's initial public offering, expected to be the largest ever by a U.S. solar company, is facing a surprisingly cloudy outlook.

Despite red-hot industry growth, as the price of competing energy sources soars, investors have not shown a sunny disposition toward solar energy stocks lately.

The stocks of industry leaders Suntech Power Holdings Co Ltd (STP.N: Quote, Profile, Research, Stock Buzz) and Applied Materials Inc (AMAT.O: Quote, Profile, Research, Stock Buzz), among others, have been cooling from March rally levels since late May. Suntech is down about 18 percent from its high in spring, while Applied Materials is down about 9 percent.

Those declines could cast a pall over GT Solar, a Merrimack, New Hampshire-based maker of the manufacturing equipment used by solar energy companies, whose IPO is scheduled for next week.

"It'll hurt that solar stocks have been volatile," said Samuel Snyder, a senior research analyst with Greenwich, Connecticut-based advisory firm Renaissance Capital. "But investors will see unique aspects that make GT Solar attractive."

One of those advantages is GT Solar's position as one of only a few makers of the manufacturing equipment used by the solar companies, analysts say.

"It's a less fragmented arena," said Pavel Molchanov, an alternative energy analyst with Raymond James & Associates. "The landscape is not quite as competitive."

GT Solar's regulatory filings also reveal a compound annual growth rate of 128 percent in the past two years that should comfort investors, with revenues of $244 million for the year ended in March.

That growth rate explains why GT Solar would trade at 66 times 2008 earnings if the IPO priced at the midpoint of its forecast range, a high multiple compared with those of other solar stocks, said Scott Sweet, an analyst with IPO Boutique.  Continued...