Lots of analyst reaction to First Solar (FSLR) earnings last night. Here’s the run down with a hat tip to Street Insider for the analyst commentary.
Buy Ratings
Brigantine Advisors reiterates its Buy rating and raises the price target from $144 to $150.
“Investor sentiment in the solar sector has been weak for much of this year, and we think the strong report from First Solar will go a long way to allay most concerns. The company is benefiting from the expected reduction of German feed-in-tariffs within the next few months, and the company’s entire 2010 production is sold-out. As a result the company is pushing out some of its systems business, even as its pipeline grew further even without the contribution of NextLight, whose acquisition was announced yesterday. The company plans to increase its production capacity by nearly 60% by 2012. Our street-high 2010 estimates go higher to $7.25/2.7B from $6.75/$2.8B, while 2011 estimates are unchanged at $8.85/$3.57B.”
Deutsche Bank upgrades from Hold to Buy and raises price target from $125 to $155.
I don’t see comments from Kaufman, Piper Jaffray and Barclays yet, but they were bullish going into earnings and I wouldn’t expect that to change. Will update this report should they issue comments.
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Overweight/Outperform Ratings
Baird upgrades from Neutral to Outperform and raised price target from $120 to $160.
Thomas Weisel maintains Overweight rating and believes much of the bear case has been weakened. They see an EPS near $8 in 2011.
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Hold/Neutral Rating
Canaccord Adams maintains its Hold rating but raises price target from $130 to $140.
“The beat and raise is a result of some favorable pricing as well as allocating more of its manufacturing capacity to direct module sales mix over its own captive development pipeline, both made possible by the overwhelmingly tight macro environment. However, we still believe the impending mid-year subsidy cut in Germany could lead to a potential slowdown, forcing First Solar to re-allocate more capacity into its systems business to buffer the fluctuation in demand. While these sales carry greater revenue contribution and in the long run may enable larger-scale, industry-wide solar deployment, the loss of leverage associated with the shift will likely lead to downward pressure on the stock’s multiple from any near-term strength.”
Soleil Securities upgraded from Sell to Hold and increased the price target from $90 to $117.
“First Solar reported better than expected results for the first quarter of 2010 – EPS of $2.00 per share on revenues of $568mm (consensus was $1.63 per share on revenues of $543mm)…The EPS uspide was the result of better than expected ASPs in the quarter due to the red-hot demand environment in Germany (rush to get systems installed before mid-year reductions in feed-in tariffs)…We are raising 2010 and 2011 estimates – 2010 estimate going from $5.34 to $6.80 per share; 2011 going from $5.90 per share to $6.50 per share.”
Citigroup maintains Neutral rating and price target of $135.
“Strong Q/guide and most importantly announced some new capacity adds (as we suspected) given new focus on share gain and demand for its product that remains very high. With the stock near our $135 target, however, and minimal changes to our estimates (consensus most likely to come up), it is hard to argue risk/reward overly compelling unless one builds a case for EPS to break out of the ~$7.00+/- $0.75 range. More of FSLR’s revs will go to pre-negotiated PPA deals in 2011, but we are still hard pressed to see much if any EPS growth in 2011 as pricing seems apt to be a bigger headwind given the alleviation of wafering bottlenecks for competing silicon product, ongoing poly oversupply, and potential demand perturbations due to pull-ins this year. Rather, we see 2012 as the big year (~$9.50-10 EPS) but it seems early to pay for it…Prefer over Sell rated SunPower (SPWRA)
Auriga maintains Hold rating but raises estimates and price target from $143 to $147.
UBS maintains Neutral rating, but raises price target from $119 to $140.
“FSLR’s flexible business model allows near term focus back to its module business and the recent announcement to acquire Nextlight is being viewed positively. Raising FY10 EPS estimates from $6.28 to $7.02 and FY11 EPS from $7.45 to $8.26 given the shift to more module sales in 2010.”
What say you Bronte Capital? Will you defend your bearish case?