Research Roundup: First Solar Losing its Shine?
First Solar (FSLR), once the darling of the clean energy world, appears to be falling out of favor.
Today the stock was downgraded to Underweight by JPMorgan, which also slashed its price target to $85 from $140.
According to Notable Calls Morgan believes the industry faces a number of supply and margin headwinds that are likely to cause many solar stocks to underperform what they feel are more attractive alternative energy investments in the LED and Wind sectors which look to have better underlying fundamentals over the next 12 months.
Searching on Alacra Pulse reveals that JPMorgan’s action was the latest in a line of negative analyst comments.
In late February, Wunderlich initiated coverage of FSLR at Sell and on Feb 19, FSLR was Cut to Neutral at Merriman Curhan Ford and to Hold at ThinkEquity.
24/7 Wall Street’s John C.Ogg noted on Feb 18 that “there is nothing great and nothing awful to report” in the company’s latest quarterly earnings.
However, in a Mar 6 report, Standard & Poor’s had a Hold rating on First Solar: “Our 12-month target price of $135 is based on a price-to-earnings multiple of 21.2X our 2010 EPS projection, above peers.
W
e believe FSLR merits a premium valuation, based on our view of the company as a leader in bringing out a solar energy product with low production costs.
JP Morgan’s estimate of $85 is based on a valuation 15x EPS.
First Solar had one small piece of good news today: it signed a power purchase agreement to supply Pacific Gas & Electric with 300 megawatts (MW) of solar from its 550 MW Desert Sunlight project.
For latest analyst comment on First Solar see Alacra Pulse.
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