First Solar Inc. (NASDAQ: FSLR)
The past 52 weeks have been a wild ride for shares of First Solar. The stock price has been as high as $73.78 in September and as low as $39.18 in January. Some of the large fluctuation was due to the big drop in oil prices because cheap oil makes solar less appealing and more expensive by comparison as a source of power. But much of First Solar’s wild ride was due to its own story. With positive earnings just released, it looks like a ride up might be in store for share prices.
FSLR Second Quarter Earnings
After the market close on Tuesday, First Solar announced net sales of $896.2 million. That was a 91% increase over the first quarter of 2015 and a 65% increase over second quarter sales from last year. In fact, the only quarter that produced higher sales in the past year was the fourth quarter of 2014 at $1,007.9. First solar said sales numbers for this second quarter were helped out by a couple different factors. First, there were large proceeds “from the sale of majority interests in the North Star and Lost Hills-Blackwell projects.” And second, they received profits from the IPO of their YieldCo 8point3 Energy Partners that was founded in partnership with SunPower. Net income was also healthy and helped out by a $42 million tax break, project cost improvements, and higher systems project revenue. Earnings per share for the year were guided up to $3.30 – $3.60 from the $2.36 that was previously expected. Shares moved up 7.82% to $47.98 in afterhours trading.
First Solar’s Efficiency Advantage
Another point of emphasis made by First Solar CEO Jim Hughes was solar conversion efficiency. He said that the company set a new record for module conversion efficiency at 18.6%. The previous record was 17.7%. This new world record was first reported in June by First Solar. Analyst Paul Koster at JP Morgan said that pushing the envelope like this for what is technologically possible could give First Solar a “significant competitive advantage.” If efficiency levels for First Solar’s modules can continue catching up to efficiency levels of some more expensive modules, Koster says that First Solar could have a real “game-changer” on its hands. He also points out that share prices have gone down 20% since mid-June even though nothing has changed in the company’s fundamental picture.
Recent Analyst Opinions
Before earnings were released, there was some recent activity among analysts covering First Solar. A chain of good pieces came out about halfway through July. Paul Koster’s piece was the initiation of coverage by JP Morgan on July 14th with an overweight rating and a $68 price target. Goldman Sachs also initiated coverage on the stock on July 14th with a neutral rating but a $55 price target. On the same day, Standpoint Research upgraded First Solar from a hold to a buy rating with a $60 price target. Aside from that busy day among analysts, sentiments have been more mixed. On July 7th, Vetr analysts upgraded the company from a buy rating to a strong buy rating. But TheStreet downgraded its own rating of First Solar from a buy to a hold rating on June 4th.
Company Profile
First Solar Inc is a Tempe, Arizona-based manufacturer, installer, and recycler of photovoltaic solar panels. They also construct, finance, and maintain utility-scale solar power plants. After being founded in 1990 and undergoing several name changes and an acquisition, the company first went public in 2006. First Solar was ranked as the #1 solar contractor in 2012 and 2013 by Solar Power World magazine. Its net cash balance at the end of June was $1.5 billion.
