Thursday, August 4, 2016

First Solar Reports, Beats, Cuts Guidance, Down 13%, Analysts Comment (FSLR)

This seems like an over-reaction but illustrates one of the reasons you haven't seen much here on the blog about the solars.
(except for the declines of SunEdison and SolarCity)

It is just so hard to make money in the industry as portfolio--as opposed to direct--investments.
The charts offer no insight but this should be tradable to the upside:

FSLR First Solar, Inc. daily Stock Chart
FSLR $42.81 down $6.43 (13.06%)

From 24/7 Wall Street:

How Analysts Are Changing Their Views on First Solar After Earnings
...The large shock in the report was that net earnings fell a whopping 86% due to restructuring charges. First Solar’s GAAP earnings tanked to $0.13 per share from $0.92 due to an $86 million charge. That restructuring charge was due to its decision to stop making solar panels using TetraSun’s experimental technology.

First Solar’s 2016 earnings guidance was lowered to $3.65 to $3.90 per share from the prior $4.10 to $4.50 range.

24/7 Wall St. has tracked several analyst price target adjustments in First Solar shares. Not all the ratings are negative here, but these were generally followed by lower price targets.
Janney maintained its Buy rating but lowered its fair value estimate to $68 from $89. Its report said:
The company announced strategic changes to its business model on a go forward basis, which will result in significant cost savings, and offered what we consider to be a fairly static guidance for 2016. Looking forward, it continues to make progress in building its backlog of systems projects for 2017, and its move to Series 5 production should further pressure its rivals and improve its competitive position. That said, the restructuring activities appear to be preparation for lower system project volumes in 2017, and we’ve reduced our forecasts to align with a more conservative posture.
Oppenheimer has an Outperform rating and a $56 price target. The firm’s view is that First Solar is executing in a tough operating arena but questions still linger about 2017. Its synopsis said:
First Solar posted results largely in line with expectations as the company announced restructuring charges primarily related to TetraSun and tracker efforts. While First Solar appears to be managing well through a challenging environment, we believe investors will focus on 2017 dynamics with concerns around module profitability and timing for project monetization.
We would not be surprised to see First Solar achieve high-end of 2016 guidance due to strong monetization of its projects in part driven by lower tax equity prices and additional back leverage. We believe bookings suggest almost all of its new sales are module sales but note that all of that backlog has fixed prices and should see improving margin with cost reduction. We remain constructive on what we believe are baseline estimates and valuation.
Credit Suisse has a Neutral rating, which originally looked like it was still calling for big upside. The Credit Suisse target was slashed to $50 from $65. The firm’s report remains cautious:
As we have been highlighting for over a year, we believe earnings will decline significantly in 2017 as high-margin vintage projects are completed and the company transitions more volumes to module sales (instead of system development), which carry less system content. First Solar reported they have 400 MWs of system business booked for 2017, another 300 MWs where they are comfortable, and 300 MWs of opportunities with a lower probability of materializing....