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First Solar's Q2 Was Solid Amid Cyclical Fears, Future Skepticism

While First Solar, Inc. FSLR delivered a strong 2Q, with bookings ahead of expectations, there is low visibility into the 2017 performance, Goldman Sachs’ Brian Lee said in a report. He maintained a Buy rating on the company, with a price target of $67.

First Solar reported its GAAP EPS at $0.13, significantly lower than the GS and consensus estimate of $0.53. The miss was on account of TetraSun-related charges and a restructuring-related write down, analyst Brian Lee mentioned. The company’s non-GAAP EPS came in at $0.87, ahead of the GS and consensus expectation of $0.55.

First Solar left its full-year guidance broadly unchanged, except for certain non-cash charges and lower capex. Lee reduced the non-GAAP EPS estimates for FY16 and FY17 from $3.73 to $3.45 and from $3.48 to $3.46, respectively. The non-GAAP EPS estimate for FY18 was raised from $3.96 to $4.21.

Higher Bookings Than Expected

Although investors were concerned about 2Q bookings, First Solar’s execution was string, with 800MW, including a significant mix of projects. Lee added, “Roughly half of this moved from early-stage status to bookings, an encouraging trend that offsets a decline in First Solar’s mid-to-late stage potential bookings qoq.”

Low Visibility Into 2017

First Solar continued to have “a guarded view on providing out-year specifics,” indicating it was 40 percent covered on its 1GW systems target for 2017 and maintained a “module-heavy mix view for next year,” the analyst mentioned.

The company suggested its component margins would likely be stable in the near term, since recent bookings largely reflected the “weaker module ASP environment that has materialized of late.”

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DateFirmActionFromTo
Jul 2016Deutsche BankDowngradesBuyHold
Jun 2016Wells FargoInitiates Coverage onMarket Perform
May 2016Argus ResearchMaintainsBuy

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