Lee also cut his price target for First Solar to $45 from $61. In a note, Lee wrote that First Solar "has virtually no exposure" in the fast-growing rooftop solar panel market. Lee predicted the rooftop solar panel market will expand by 45% plus compound annual growth in the U.S. through 2016.
The analyst predicted the solar panel maker will see a decline in earnings in the near future. Most of First Solar's current revenue comes from utilities.
TheStreet Ratings team rates FIRST SOLAR INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about its recommendation:
"We rate FIRST SOLAR INC (FSLR) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FSLR's very impressive revenue growth greatly exceeded the industry average of 10.4%. Since the same quarter one year prior, revenues leaped by 50.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FSLR's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.29, which illustrates the ability to avoid short-term cash problems.
- FIRST SOLAR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FIRST SOLAR INC reported poor results of -$1.19 versus -$0.50 in the prior year. This year, the market expects an improvement in earnings ($4.39 versus -$1.19).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, FIRST SOLAR INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for FIRST SOLAR INC is currently lower than what is desirable, coming in at 33.26%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 15.41% trails that of the industry average.
- You can view the full analysis from the report here: FSLR Ratings Report