First Solar, Inc. (FSLR): Expectations In Near Term

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According to JMP Securities, 2017 and half of 2018 appear to be difficult transitioning years

JMP Securities offered bearish comments on First Solar, Inc. (NASDAQ:FSLR) in a recent note and downgraded the stock to Underperform from a prior Market Perform rating. The firm also affirmed a price target of $28 on FSLR, implying 13.92% downside potential on the latest closing price of $32.53.

JMP Securities MD, Joseph Osha, said, “We are downgrading our investment recommendation for First Solar from Market Perform to Market Underperform and establishing a price target of $28 per share. We believe the company is taking the right measures to position itself for an eventual return to growth, but 2017 and most of 2018 look to be difficult transition years, in our opinion.”

With the aggressive pricing of utility-scale solar projects, Mr. Osha believes the most probable result is that First Solar may struggle in competitive operation until it brings out its own new Series 6 solar panel manufacturing completely on line in late 2018. He believes monetizing current backlog may facilitate the accounts but he still sees First Solar’s QoQ revenue run-rate declining to $300 million in the second half of CY17, which is likely to persist through the first half of 2018.

On the other hand, the Street analysts also anticipate major declines in the company’s production in 2017 and 2018. First Solar management has forecasted over 18% of panel efficiency by the time Series 6 is launched. With the ramping mono-PERC technology, the launch of Series 6 by First Solar may just be to keep up with larger peers, especially Chinese manufacturers.

First Solar is a solar panel manufacturer based in Tempe that has a total market valuation of $3.30 billion. FSLR shares have 6.72 price-to-earnings ratio, while the 52-week trading range stands at $74.29 – $28.60.

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