Friday, September 8, 2023

"First Solar Stock Rises After Analyst Day. What Wall Street Thinks." (FSLR)

The stock is up up $1.35  at $181.85

From Barron's September 8:

First Solar stock was rising Friday after analysts provided bullish commentary on the solar panel company.

First Solar (ticker: FSLR) hosted its first analyst day since 2017 before the opening bell on Thursday, providing investors and Wall Street analysts with its cost cutting plans and technological investments for the next three years.

First Solar FSLR +0.83% management said that it expects gross margin, excluding the value of the Inflation Reduction Act, rising from 20% to 30% over the next three years.

The Inflation Reduction Act provides incentives to homeowners to install solar panels on their roofs. This law led many on Wall Street to believe there would be a surge in demand for solar power. And while persistently-high inflation and rising interest rates have caused other solar companies to cut their outlooks on weakening demand, First Solar said that it is seeing the opposite.

“The IRA was signed in the middle of 2022. This has undoubtedly helped our backlog. It’s undoubtedly helped demand,” Chief Financial Officer Alexander Bradley said on the call.

Following the event, Deutsche Bank analyst Corinne Blanchard upgraded shares of the solar company to Buy from Hold and increased her price target to $235 from $220, implying a 30% increase from the stocks closing price on Thursday.

“All-in we walked away from the Analyst Day with a positive message, and we
believe First Solar delivered what investors have been looking for — a strong 3 year roadmap, with improving numbers and core margins,” Blanchard said in a research note....


Looking at the five-year chart (from BigCharts) you can see why they didn't hold any "Analyst Days":

Until the Inflation Reduction Act was passed in 2022 there wasn't much to talk about.

However, as we saw in August's "First Solar, The Poster Child For Solar Subsidies Has Had An Awful Month (FSLR)": 

As the Wall Street Journal noted on July 31:

The U.S. Clean-Energy Company That Hit the Subsidies Jackpot

Of all the beneficiaries of the U.S.’s green-energy push, few have hit the jackpot like First Solar. The Arizona-based solar-panel manufacturer expects to receive as much as $710 million this year—nearly 90% of forecast operating profit—from subsidies the U.S. government rolled out a year ago to encourage domestic renewables production. One analyst estimates the incentives could be worth more than $10 billion for the company over the next decade. . .

The company’s shares have more than doubled to $208.40 in Friday trade since the beginning of 2022, despite a string of earnings disappointments during that period.... 

Which led yours truly to opine (a few minute to the open on Aug. 25, previous close $174.42):

As can be seen, the stock traded at $224.50 on July 28.

After the $50.08 (22.3%) decline the stock might be offering itself up for a trade to the long side but not today. In pre-market action the stock can only muster a 33 cent uptick on a day when all three major index futures are up going into the open.

FSLR will be reporting earnings in October so somewhere in the Aug. 28 - Oct. 26 time frame there should be an opportunity but we have no interest on JPow speech day and/or until the stock can find a bottom.

So, not exactly gamboling across the greenswards but perhaps searching for a bottom.