Analysts and Charts Duel Over First Solar (FSLR, SPWRA, JASO, STP, TAN)

First Solar, Inc. (NASDAQ: FSLR) is starting to enter into a no-man’s land after earnings.  It is such that even the analyst community is very mixed on the stock both before and after earnings.  We wanted to highlight some of the analyst takes from this morning and then also add in some internal color for investors because the game may be changing here significantly.  This is also taking its toll on SunPower Corporation (NASDAQ: SPWRA), JA Solar Holdings Co., Ltd. (NASDAQ: JASO), Suntech Power Holdings Co. Ltd. (NYSE: STP), and the Guggenheim Solar (NYSE: TAN) is down 1.75% at $8.54.

For starters via analyst calls after the fact, UBS reportedly downgraded the stock to Neutral but there is some dispute on this now.  Despite calling it one of the best business models in the sector out there, Auriga only maintained a Hold rating with a $167 price target.  Collins Stewart reiterated its Buy rating. Gleacher & Co. also reiterated a Buy rating and lifter its target to $185 on the stock.

Again here were the results and the guidance:

• $1.80 EPS versus Thomson Reuters estimates of $1.77 EPS; revenues were a tad light on a 5% drop to $610 million versus estimates of $648 million.
• Soft revenue figure attributed to sales timing and early 2011 pricing.
• 2011 guidance range of $9.25 to $9.75 EPS from $8.75 to $9.50 EPS previous and Revenue guided to $3.7 to $3.8 billion for 2011 versus prior $3.7 to $3.9 billion for 2011.
• Reiterated a $1.0 billion to $1.1 billion cap-ex budget and sees operating cash flow of $1.0 billion to $1.1 billion.

First Solar shares actually have a consensus analyst target of just over $157 today, and even after a 4.8% drop to $156.80 in mid-morning with 1.6 million shares there is just no reason to go after it.  The stock is not expensive on a valuation of about 16.4-times expected earnings.  The other side of the coin is the risks outweigh the upside based on today’s available information.

Continued government spending pressure is a significant risk that may not be fully baked into the cake.  First Solar could drift down to under $150 just as easily as a bull market could drive it to $165… Another issue is that when oil spiked higher above $100 this week with Libya and fears of Saudi-interruptions there was not a rush into First Solar as the “leveraged super-oil play” that you might have expected.  Supporting StockCharts.com below should show more of the same.  The stock is just in a technical no-man’s land and perhaps is even at the right shoulder of a “head and shoulders” cycle:

SunPower Corporation (NASDAQ: SPWRA) is down 2.5% at $17.89.

JA Solar Holdings Co., Ltd. (NASDAQ: JASO) is down over 3% at $7.50.

Suntech Power Holdings Co. Ltd. (NYSE: STP) is down 2.7% at $10.03.

Even the Guggenheim Solar (NYSE: TAN) is down 1.75% at $8.54.

All of this is happening on a day where the market has finally caught a bid.  Imagine the reaction if the market would have fallen sharply again on geopolitical concerns.

JON C. OGG