Mizuho Securities believes outlook for First Solar remains challenging
First Solar, Inc. (NASDAQ:FSLR) stock rating was maintained as Neutral by analyst James von Riesemann at Mizuho Securities. The analyst believed that the company is facing tough challenges and industry headwinds, which could continue this year along with the next year, hence, the Neutral rating for the stock. The analyst also lowered First Solar’s price target to $46.
The analyst in a research note on the company mentioned that the challenges are because of substantial supply build-up ahead of Investment Tax Credits (ITC), roll-off of its high-margined legacy projects and also due to its switch-over in technologies as company heads towards higher-density Series 5 module.
As of now, it has become difficult for its investors to value First Solar, and also for the Sell-Side firms considering limited transparency of data. All of this has resulted in lowering the Price target for the stock, and has made analysts more cautious.
The company reported its 2Q results on August 3, in which it reported Earnings Per Share (EPS) of $0.87 which surpassed expectations by $0.32. Moreover, its revenues totaled to $934.38 million which also surpassed expectations by $71.7 million, and were around 4.3% higher on Year-over-Year (YoY) basis.
Despite of such results, the stock plunged by around 13% the next day. The main reason behind the decline in stock price was management’s poor outlook for the next year. Although First Solar is executing well on its plans, and the remaining performance in 2016 is expected to be good as its projects are inline to be completed by the year end, but the uncertainty regarding next year is overshadowing the stock’s potential.
In past five days of trading, stock has already lost 16.2% of its value. The recent decline has also resulted in Year-to-Date (YTD) stock decline of 41.6%. Despite of a recent sell-off, the stock could present a decent accumulation opportunity at a lower price.