First Solar: S&P Intraday Laggard

NEW YORK (TheStreet) -- First Solar (FSLR) was the worst-performing stock in the S&P 500 on Wednesday morning.

The S&P 500 was rising almost 1 point, or 0.06%, to 1,324.

Shares of First Solar fell 6.62% to $13.96. The stock rose about 20% on Tuesday; Jefferies analysts called the rally based on the increase in production in First Solar's German plants "unwarranted."

"We estimate at peak the facility would generate ~530MW of solar panels annually," Jefferies analysts wrote in a report on Wednesday. "At full capacity the facility would generate 220MW between June and October. Given the company has been running its facility at reduced capacity since early 2012 (a time when volumes were very healthy in Germany), we find it more likely this is an incremental order from Australia or perhaps the company expects to be successful in the upcoming second French tender; however, even an order of 220MW would not be indicative of improving demand. We remind investors that the preponderance of capacity for First Solar is in Malaysia, which remains underutilized."

Analysts at Jefferies have a hold rating on First Solar's stock.

On the other hand, Bank of America Merrill Lynch analysts wrote in a report Wednesday that more significant news than its German production rate could send the stock higher.

"If First Solar's stock is so disliked that an inconsequential announcement can cause a 20% rally, imagine what a more significant development could do," Bank of America Merrill Lynch analysts wrote. "Our most recent checks suggest that LDK Solar, China's most troubled large-scale solar supplier, is being cut off by equipment suppliers as a result of problems paying bills. A recapitalization or partial shutdown is within the range of possibilities, and we think the market would react dramatically. There are other similar situations. On the other hand, it is difficult for us to imagine any development that could add more negativity to the sentiment surrounding solar."

Bank of America Merrill Lynch analysts have a buy rating on the stock with a $30 price target.

Twenty-six of the 38 analysts who cover First Solar rated it buy. Six analysts gave the stock a buy rating and another six rated it sell.

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