FirstSolar Kept at Neutral - Analyst Blog
27 März 2013 - 1:42PM
Zacks
On Mar 21, we maintained our Neutral recommendation on
vertically-integrated solar manufacturer, First Solar
Inc. (FSLR), following appraisal of its fourth-quarter
results.
Why the Neutral Recommendation?
On Feb 27, 2013, First Solar announced fourth-quarter 2012 results.
Fourth-quarter 2012 adjusted earnings per share comfortably beat
the Zacks Consensus Estimate of $1.75 by 29 cents to clock adjusted
earnings of $2.04. It also surpassed the year-ago quarterly EPS of
$1.26. On a reported basis EPS came in at $1.74 in the fourth
quarter of 2012 versus a loss of $4.78 per share in the year-ago
quarter.
First Solar’s quarterly revenues were $1.08 billion, up from
$660.35 million in the fourth quarter of 2011. The increase in net
sales was primarily due to increased revenue recognition for the
Topaz project, and an increase in third-party module sales.
Quarterly revenue however fell behind the Zacks Consensus Estimate
of $1.32 billion.
Going forward, in the first quarter of 2013, the company expects
total revenue in the range of $650 million to $750 million. First
Solar expects earnings per share in the range of 70 cents to 90
cents in the first quarter of 2013.
Following fourth-quarter results, only 2 estimates rose over the
past 60 days, while 10 estimates were slashed. The Zacks Consensus
Estimate for 2013 fell to $3.62 from $4.02 over the last 60 days.
Accordingly, First Solar carries a Zacks Rank #3 (Hold). In fact
the company has delivered positive earnings surprises in 3 of the
past 4 quarters.
First Solar Inc., along with its solar peers, is currently
witnessing a steep drop in Average Selling Prices. Also, the
current macro scenario does not bode well for the solar industry,
which thrives mainly on subsidies and grants. However, First Solar
stands out among the pack due to its stable liquidity position,
which is in sharp contrast to its cash-strapped peers. In order to
counter the weak trend, the company is focusing more on
utility-scale electricity power projects. Moreover First Solar is
partially compensating for its drop in margins through a major
restructuring of its operations initiated in 2012.
Other Stocks to Consider
Other stocks in the solar industry that are currently performing
well and have a bright outlook include Canadian Solar
Inc. (CSIQ), Str Holdings Inc. (STRI) and
ReneSola Ltd. (SOL), all with a Zacks Rank #2
(Buy).
CANADIAN SOLAR (CSIQ): Free Stock Analysis Report
FIRST SOLAR INC (FSLR): Free Stock Analysis Report
RENESOLA LT-ADR (SOL): Free Stock Analysis Report
STR HOLDINGS (STRI): Free Stock Analysis Report
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