Wednesday, May 4, 2011

First Solar Analyst Roundup: Auriga, Brigantine, Cowen, Chanos (FSLR)

With the DJIA down 130 FSLR is off $8.80 at $125.86.
Following up on "First Solar: Goldman Sachs Maintains Buy, $190 Target, Morgan Stanley 'More Constructuve' (FSLR)" Tech Trader Daily does the heavy lifting:

Shares of First Solar (FSLR) continue to trade down this morning following an 8%-or-so drop last night after a Q1 report that beat estimates but saw the push-out of a project in Q2 and some cautious comments about solar energy subsidy regulation in Europe.

First Solar shares are down $8.66, or 6.4%, at $126.

None other than hedge fund titan Jim Chanos was on CNBC this morning talking down the stock, predicting the price could drop to “the mid double-digits.” Note that Chanos’s remarks came in the context of his warning to get the heck out of China, where he thinks the growth path of the economy is unsustainable.
There’s a real easy part of the story: Insiders are selling lots and lots of stock over the past year, and insiders are leaving the company. That’s never a good sign. Whether you should be short, we have some issues with some of their accounting, we have some issue with some of their subsidized markets. And quite frankly, solar, still, is at a point where it does not compete with natural gas. we cannot rely on wind and solar for base load. We’re still looking for the magic bullet for solar and wind. I think the stock certainly could earn a lot less than the $9 run-rate the bulls are looking at.
(See the video below.)
I see three downgrades this morning — I missed one earlier, from Credit Suisse — and one upgrade in the Street’s initial assessment, but also a deep divide between those who don’t like how much emphasis has been put on the latter half of the year to make the $9 profit mark, and those who see plenty of levers for First Solar to pull:

Mark Bachman, Auriga Securities: Raised his rating on the shares to Buy from Hold, with a $160 price target. “First Solar modules remain in high demand given the combination of low price and high energy yield,” writes Bachman. Bachman observes that while subsidy reductions create uncertainty, as long as investors can obtain debt financing and as long as First Solar’s modules offer investment returns that are “above project hurdles,” then there will actually be a “dramatic increase” in solar investment as projects rush to get going before the next subsidy adjustment. First Solar has the ability to increase project installations in the U.S., and to get into new Asian markets. “We also recognize management’s historical accuracy of forecasting both sales and profitability, thus the reiteration of 2011 guidance speaks volumes to us.”...Nine MORE plus video.