First Solar (FSLR) Stock Tumbles After Ratings Downgrade

First Solar (FSLR) stock is diving on Thursday afternoon following a downgrade to ‘hold’ from ‘buy’ at Deutsche Bank.
By Kaya Yurieff ,

NEW YORK (TheStreet) -- Shares of First Solar (FSLR) - Get Report are dropping 9.71% to $44.36 on heavy trading volume Thursday afternoon after Deutsche Bank slashed its rating on the stock to "hold" from "buy" earlier today.

The firm also cut its price target on shares to $44 from $80.

Deutsche Bank's lower rating is due to: "1) slower than expected ramp in bookings; 2) likely pause in demand ahead of the series 5 ramp and 3) potential increase in pricing pressure, driven by aggressive bidding environment from the developers in international segments," the firm wrote in an analyst note.

Increased competition from Chinese suppliers is creating further risk to module margins, Deutsche Bank noted.

Most Chinese module manufacturers are now expanding capacity outside of the Asian nation, which is enabling them to avoid import duties into the U.S and pass the cost savings to end customers, according to the firm.

For 2017, Deutsche Bank sees earnings per share of $1.50 vs. consensus expectations of $3.18 and 2018 EPS of about $2.50 compared to Wall Street's projections of $3.98.

"Even though FSLR remains one of the best run companies in our coverage, we believe it would be difficult for management to grow earnings amidst some of the expected near term headwinds," the firm noted.

About 8.03 million of First Solar's shares were traded so far today vs. its average 30-day volume of 1.74 million shares per day.

Separately, TheStreet Ratings Team has a "Hold" rating with a score of C+ on the stock.

The primary factors that have impacted the rating are mixed. 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 reasonable valuation levels.

However, the team finds that the growth in the company's earnings per share has not been good.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

You can view the full analysis from the report here: FSLR

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