This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Solar Stock Earnings: First Solar Declines

NEW YORK ( TheStreet) -- First Solar (FSLR - Get Report) shares are selling off on Friday, down by more than 4%. The U.S. solar company's revenue came in light for the fourth quarter and the company lowered its high-end revenue guidance for 2011.

First Solar shares were recently trading at $156. First Solar shares had rallied as high as $175 earlier this month, as the price of oil spiked, and as expectations that Italy might cut support for solar in the first half of 2011 were pushed back to the second half of the year, or even 2012.

Even at $156, First Solar shares are trading at a hefty premium to the rest of the solar sector, at roughly 17 times earnings. The selloff in First Solar shares post-earnings has been a typical reaction for the stock. Analysts in the solar sector noted that it's been a trend for First Solar shares to rise ahead of earnings and sell off on the news. The selloff in shares on Friday was moderate as compared to First Solar earnings sell-offs in previous quarter, too.

"We are not surprised to see the stock trade off a few points ... as we believe investors will be a bit concerned regarding management's commentary on a more backend loaded year because on US/Canada systems timing and a lack of visibility in W.Europe on FIT uncertainty in Germany, Italy and France," noted Stifel analyst Jeff Osbourne.

The First Solar earnings was consistent with the outlook from other solar companies reporting earlier in the season, with a slight modification. First Solar said the first half of 2011 will be strong, yet the second half of the year could be a tighter economy based on feed-in tariff changes in Europe. SunPower (SPWRA) said in its earnings that there would be no changes in Italy until 2012. The Street view, too, has migrated to the thesis that Italy will move more slowly to reduce solar support and it's more likely to be a 2012 event.

In any event, Italy is expected to announce its plans for solar subsidy changes by the first week of March, which will be an important date for solar stocks.

In terms of the specific numbers presented by First Solar and its 2011 outlook, here are some important pros and cons:

  • Another back-end loaded year for a stock already trading at a premium.
  • As Jeff Bencik, analyst at Kaufman Brothers noted in a First Solar earnings wrap, "Importantly, the guidance is back-end loaded for the year and we do not foresee any likely catalysts until 2H11 when the majority of the 290MW Agua Caliente project revenues should be recognized. Currently in an expansion phase, FSLR plans to ramp several new production facilities, expecting to come on line in 2011.... Although the ramp of additional manufacturing lines will significantly increase capacity in 2011, the benefit is back-end loaded, which will likely increase uncertainty for investors. "

    1 of 3

    Check Out Our Best Services for Investors

    Action Alerts PLUS

    Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    Quant Ratings

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    Stocks Under $10

    David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    14-Days Free
    Try it NOW
    Only $9.95
    Try it NOW
    14-Days Free
    Try it NOW

    Check Out Our Best Services for Investors

    Dividend Stock Advisor

    David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

    Product Features:
    • Diversified model portfolio of dividend stocks
    • Updates with exact steps to take - BUY, HOLD, SELL
    Trifecta Stocks

    Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

    Product Features:
    • Model Portfolio
    • Intra Day Trade alerts
    • Access to Quant Ratings
    Options Profits

    Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

    Product Features:
    • Actionable options commentary and news
    • Real-time trading community
    Try it NOW
    Try it NOW
    Try it NOW
    To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
    Submit an article to us!
    SYM TRADE IT LAST %CHG
    FSLR $60.43 1.40%
    AAPL $126.42 2.60%
    FB $82.89 -0.49%
    GOOG $548.42 0.02%
    TSLA $190.69 3.10%

    Markets

    DOW 17,890.79 -85.52 -0.48%
    S&P 500 2,086.24 +25.22 1.22%
    NASDAQ 4,947.4410 +56.2220 1.15%

    Partners Compare Online Brokers

    Free Reports

    Free Newsletters from TheStreet

    My Subscriptions:

    After the Bell

    Before the Bell

    Booyah! Newsletter

    Midday Bell

    TheStreet Top 10 Stories

    Winners & Losers

    Register for Newsletters
    Top Rated Stocks Top Rated Funds Top Rated ETFs