Tags: First | Solar | investors | FSLR

First Solar On Cutting Edge, but Investors Unconvinced

By    |   Monday, 23 July 2012 01:24 PM

First Solar (FSLR) might be on the cutting edge of solar panel manufacturing, but investors are unconvinced that’s a place they need to be as well. The stock price has fallen off a cliff over the past 12 months, marking a drop from a 52-week high of $124 to the current trades closer to $14 a share. Analysts blame oversupply.

First Solar manufactures and sells solar modules with thin-film semiconductor technology and designs, constructs, and sells photovoltaic (PV) solar power systems.

“We are the world’s largest thin-film PV solar module manufacturer and one of the world's largest PV solar module manufacturers. We produced nearly 2 gigawatts (GW) of solar modules in 2011,” FSLR management said in a recent filing.

“We believe that combining our reliable, low-cost module manufacturing capability with our systems business enables us to more rapidly reduce the price of solar electricity, accelerate the adoption of our technology in utility-scale PV solar power systems, identify and remove constraints on the successful migration to sustainable solar markets around the world, and further our mission to create enduring value by enabling a world powered by clean, affordable solar electricity.”

In December 2011, First Solar announced a long-term strategic plan with a goal to transition to primarily sustainable opportunities by the end of 2014. In executing the plan, the company said it will focus on providing solar PV generation solutions to sustainable geographic markets that it believes have a compelling need for mass-scale PV electricity, including new markets throughout the Americas, Asia, the Middle East, and Africa.

First Solar has a market cap of $1.28 billion in a sector, semiconductors, where the average company size is $7.41 billion. Its projected earnings per share growth for the coming year is negative 3.01 percent, compared to a sector average of 43.51 percent.

Deteriorating fundamentals

Analysts are mixed on FSLR, with buy or outperform calls from Merrill Lynch and Piper Jaffray but sell or underperform marks from JP Morgan, Ned Davis Research, and Standard & Poor’s Equity Research.

“Our sell opinion reflects our view of deteriorating fundamentals, potential downside to consensus estimates, and management turnover. Near term, we expect supply of solar modules to remain at unhealthy levels, as government incentive reductions and more challenging financing conditions impact end-demand,” S&P analysts wrote in early May.

“We see margins trending sharply lower, as we think a weaker pricing environment will persist given competitive forces and the need to stimulate consumer demand.”

First Solar next reports on Aug. 2.

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Monday, 23 July 2012 01:24 PM
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