From Notable Calls:
FBR Capital is out with a stingy call on First Solar (NASDAQ:FSLR) downgrading their rating to Underperform from Market Perfrom ($100 tgt).
Polysilicon prices taking a nose dive. Checks over the past week suggest (quality) spot poly prices have declined to $65/kg, down 35% year to date, driven by: 1) weak end-market demand for si-based modules, and 2) an aggressive attempt by industry leaders like Hemlock, MEMC, and Wacker (all enjoying average fully loaded cost of $40/kg) to further increase their lead over the new entrants (which are estimated to have $80-plus/kg cost structure).
- From inexpensive but “quality” poly to inexpensive but “quality” si-based modules. Checks also suggest six inch solar wafer prices (in the spot market) have declined to US$3.50/piece, implying that finished solar wafers are now US$1/watt. Assuming US$0.80/watt for turning wafers into modules, we estimate $65/kg poly to yield modules at a cost of US$1.60-US$1.80/watt. And even a rather aggressive GM of 20% implies si-based manufacturers could sell modules at US$2.10 (or EUR€1.62, assuming 1.3 F/X) and compete head-to-head with FSLR....MORE
