First Solar shares plunged after the company’s earnings report last night, and the company somehow managed to earn a price target increase from one firm and a downgrade from another. Meanwhile, others, especially those who are bearish on the entire solar sector, maintain their stance despite the positive indicators that were in the report.

First Solar

First Solar’s results were mixed

All in all, it’s safe to say that First Solar’s earnings report was a mixed bag. The company reported pro forma earnings of $1.24 per share on $480 million in revenue, beating the consensus numbers of 98 cents per share and $405 million. However, the gross margin greatly missed the consensus, coming in at 13.2% versus the Street’s expectation of 22.9%. The margin missed because of product mix, although the gain from the Stateline project’s dropdown to 8point3 was bigger than expected. Bookings also disappointed, as net bookings stood at zero with the book to bill ratio at 2/3 for last year. The average selling price was a mere 55 cents per watt.

First Solar also updated its fiscal 2017 guidance to reflect the new accounting treatment for its Moapa project, for which it expects to recognize all of its revenue this year rather than splitting it between 2017 and 2016. The previous guidance also placed all the project’s gross profits in 2017, so the company left its profit outlook the same and reduced its margin guide to between 11% and 13% from the previous outlook of 12.5% to 14.5%.

The company cut its GAAP guidance for the year due to updated timing for restructuring charges, but its pro forma guide remains the same.

First Solar stock downgraded to Underperform

Credit Suisse analyst Andrew Hughes downgraded First Solar stock from Neutral to Underperform after last night’s report. He also trimmed his price target by $1 to $29 per share. He feels that the timing of the company’s projects poses risk to estimates for this year and could impair the value of 8Point3 even more. Further, he believes that next year’s “book of business” looks to be unlikely to support a tripling of earnings growth, which is what consensus calls for.

Additionally, after the recent run-up in First Solar shares, he felt that normalized earnings trajectory valuation no longer looked compelling (before today’s share price decline). He feels that reaching $3 per share in earnings by 2019 must assume “unrealistic” margins for modules and/ or systems.

Other potential problems for the company are uncertainties about U.S. tax reform and 8Point3’s desire to own any operating assets, which is causing issues in terms of structuring the tax equity for the CA Flats project.

UBS analyst Julien Dumoulin-Smith chimed in with his own concerns about the CA Flats project and is now focused on when the deal will be sold down. The project has dual power purchase agreements, with the first this year and the next in 2018.There’s also the possibility of a selldown to a majority third party and then a minority owner. Dumoulin-Smith already had a Sell rating and $25 price target on First Solar stock.

First Solar stock price target boosted

JPMorgan analyst Paul Coster, on the other hand, called First Solar’s fourth quarter results strong,” pointing to the fact that management boosted its sales guide. However, he admits that visibility into the industry is limited, and First Solar’s strategy shift toward module sales will make it even harder to forecast its future. The company also plans to reduce the number of metrics it publishes.

However, he adds that First Solar’s balance sheet leads the industry and even improved during the fourth quarter. Also the transition to Series-6 products is still on track. He feels that the costs could even be better than expected, potentially providing a “systemic advantage” once the Series-6 line is fully operational. Pilot production is set to begin in the third quarter, while full production is set for the second quarter of next year with the full ramp expected to be completed by the fourth quarter of next year.

Coster boosted his price target for First Solar stock from $35 to $41 per share following last night’s report.

Shares of First Solar plummeted by about 8% during regular trading hours on Wednesday, falling as low as $33.49.