WSJ Supplies Latest Solar Pressure

The Wall Street Journal joins the chorus of negative sentiment on solar, and provides a negative outlook for First Solar, specifically.
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TEMPE, Ariz. (

TheStreet

) -- Another week, another bad start to the relationship between the financial press and solar stocks. This time, it's the venerable

Wall Street Journal

writing in its Sunday edition that

First Solar's

(FSLR) - Get Report

results could get worse before they get better -- if they ever get better, that is.

Last week's negative financial press sentiment on solar began with an article from

Barron's

, which led to a slide in solar stocks.

The

Journal

article include a stock chart showing the performance of First Solar shares since its initial public offering and notes that First Solar's stock price is down 40% in the past two years. The

Journal

article doesn't tell solar investors anything they didn't already know, though.

Bloomberg

wrote an article last week arguing that investors would have done much better to invest in coal than solar in recent months, and

made its case comparing the performance of First Solar shares to the performance of

Peabody Energy

(BTU) - Get Report

.

German feed-in tariff reductions will hit First Solar hard as it has a majority of its business in Germany. What's more, First Solar's plans to move into the lower margin systems business could spell balance sheet trouble for First Solar if it has to start financing large-scale solar projects itself.

SunPower

(SPWRA)

, which is making the same transition as First Solar to the systems business, mentioned in its earnings last week that it might tap the capital markets this year for a debt deal. SunPower also has a relatively strong balance sheet relative to the solar sector as a whole.

SunPower indicated in it earnings that its systems business was becoming a much more significant part of its mix, and its gross margins on the systems business actually increased in the fourth quarter, while margins on module sales were down significantly.

The margin improvement on the systems business didn't help SunPower shares, however.

SunPower shares were beaten down last week after its Thursday earnings. SunPower shares were down early on Monday too, with a loss just over 1%, or 27 cents to $18.69.

The

Journal

article suggested that maybe First Solar's shares were already discounting these risks. One would hope so, given the amount of press already devoted to the subjects. Nonetheless, the

Journal

has spoken, and First Solar shares were among the biggest decliners in Monday's pre-market session, down close to 3%, or a loss of $3.30 to $110.

First Solar hasn't closed below $110 since March 9.

And to think, solar investors thought

TheStreet

was negative on solar.

-- Reported by Eric Rosenbaum in New York.

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