It’s Almost Analyst Day With First Solar, Inc. (FSLR)

Updated on

Believe it or not, it’s that time of year again. On Wednesday, popular solar energy company, First Solar, Inc. (NASDAQ:FSLR), will hold its annual analyst day, inviting interested parties to learn about the company’s future plans. Since last year’s analyst day, the company has recorded 200-300 megawatts and $500-700 million in revenue. This news has Deutsche Bank analyst Vishal Shah recommending HOLD First Solar with a $50 price target. However, Axiom Capital analyst Gordon Johnson is less impressed with the company, and its behavior, and is recommending SELL First Solar.

While Vishal Shah is still waiting for some long-term reassurance from the company, he is still ready to advise HOLD First Solar, Inc. (NASDAQ:FSLR). Vishal believes, “consensus estimates will trend upward because of the lower expectations. And even though there is a higher earnings per share count, [he] expect[s] First Solar, Inc. could update previous targets of between $2.50 and $4 a share to between $3.50 and $4.50 a share this year.” Vishal is ranked 2097 out of 2458 analysts, with a -2.5% average return over S&P-500 and a 43% success rate of recommended stocks.

On the other hand, number two ranked analyst, Gordon Johnson, currently has a bad feeling about the company, and is advising SELL First Solar, Inc. (NASDAQ:FSLR) in anticipation of the analyst day. The company recently improved disclosure around the percent of revenue recognized on utility projects through December 31, 2013, leading Gordon to observe, “that outside parties (modules First Solar isn’t selling to itself) demanded just ~66MW of First Solar’s panels in C4Q13, we peg the probability of a guidance miss vs. 2014 consensus ests.>60% vs. ~40% prior to updating our model; we see earnings falling off a cliff in 2015.”

According to Gordon, First Solar, Inc. (NASDAQ:FSLR) has also lost competitive advantage in this field. Gordon argued, “The fundamental problem facing First Solar , despite management’s posturing on how it is cost competitive with its c-Si module peers (which, given the -81% fall in revenues from the sale of panels into the third-party-merchant market C1Q13-to-C4Q13, suggest is simply incorrect), centers on a U.S. solar market (where First Solar derived 86% of its sales in 2013) which has evolved to a roof-top focus vs. one defined by large-scale utility projects in prior years (where we believe First Solar’s competitive EPC advantage has eroded – evidenced by First Solar losing out on the Copper Mountain 3 project to Chinese vendor Trina Solar Limited (ADR) (NYSE:TSL).”

In addition to Gordon’s observations about the company’s recent performance, Gordon noted that because his company has not been invited to attend the company’s investors day event, he feels the company must be up to something. “(Is First Solar trying to hide something?)…we find it hard to conclude any other answer than…yes.”

Gordon has also recommended a SELL rating for First Solar, Inc. (NASDAQ:FSLR) several times before this current recommending, earning returns as high as +51.2% over S&P-500! Gordon earned this return after downgrading First Solar from HOLD to SELL in 2012 citing, “the cut in the German subsidies as the catalyst.” Gordon has only seen one negative return from his six First Solar recommendations. Gordon has a +13.7% average return over S&P-500 and a 79% success rate of all recommendations.

First Solar, Inc. (NASDAQ:FSLR) will hosts analysts tomorrow, with the hopes of sharing good news and exciting new prospects, but not all analysts are ready to go along for the ride. Before you make your next financial decision in the solar sector, be sure to review each analyst’s recommendation history by downloading TipRanks, and start making informed decisions with advice you can trust.

Leave a Comment