How Analysts Are Treating First Solar After Earnings

Energy

Published: May 1, 2016 11:05 am

Last Updated: January 13, 2020 10:02 am

When solar PV maker First Solar Inc. (NASDAQ: FSLR) announced earnings after markets closed on Wednesday, the company reported diluted earnings per share (EPS) of $1.66 on revenues of $848.48 million. In the same period a year ago, the company reported a net loss of $0.61 on revenues of $889.31 million. Reviews were mixed, though, mostly because Thomson Reuters had consensus estimates for EPS of $0.93 on revenues of $966.6 million.

In addition to the big miss on revenues, First Solar said that CEO Jim Hughes is leaving the company and being replaced by Chief Financial Officer Mark Widmar effect July 1.

First Solar also raised its guidance on gross margin, operating income and EPS, but that did not stop shares from dropping by 5% to open at $59.18 on Thursday. By Friday’s close the shares had declined to $55.84.

Analysts’ reaction was generally more positive, with no ratings cuts and just one price target cut. Oppenheimer neatly summed up the case for First Solar:

We believe investors will be concerned with light bookings in 1Q:16 and the transition to a new CEO. While we believe shares may be limited near term, we would expect the company to begin announcing new wins due to product advantages, particularly in the US and select emerging markets, and likely announce a capacity expansion by year-end. We estimate that for each 1GW of new capacity the company will be able to generate an incremental ~$1.25-$1.50+ in EPS. We remain constructive on shares with the prospect of a capacity expansion announcement in coming months.

Oppenheimer has an Outperform rating on the stock and raised the target from $76 to $80 a share.

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Other ratings actions include the following:

Merrill Lynch maintained a Neutral rating and its $68 price target.
Goldman Sachs cut its price target from $96 to $92 while maintaining a Buy rating.
Janney reiterated its Buy rating and raised its price target from $86 to $89 per share.
S&P Capital IQ maintained its Buy rating and its price target of $75.

The stock closed at $55.84 on Friday, in a 52-week range of $40.25 to $74.29. The consensus price target on the shares is $74.76 and may not yet include recent changes.

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