First Solar (FSLR) Stock Downgraded at RBC Capital

NEW YORK (TheStreet) -- First Solar Inc. (FSLR) was downgraded to "underperform" from "sector perform" at RBC Capital on Tuesday morning.

The firm said it reduced its rating on the solar power systems manufacturer as it is expecting flat revenue growth this year and next.

Shares of First Solar are tumbling by 4.25% to $52.73 in pre-market trading this morning.

RBC reduced its price target on First Solar to $34 from $54.

"While we are modeling gross margin in line with company expectations provided at the 2014 analyst day, we model flattish revenue growth in 2015 and 2016, compared to the company's previous guidance of 19% growth in 2015 and 2.5% growth in 2016," the firm said in an analyst note.

"Our revenue estimate is based on an analysis of reported backlog and projects listed in company filing. Given the company's high exposure to utility scale projects and the long lead time and development cycle of those projects, we don't see upside surprise to our project revenue estimate," the note said.

Separately, TheStreet Ratings team rates FIRST SOLAR INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate FIRST SOLAR INC (FSLR) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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. To add to this, FSLR has a quick ratio of 1.97, which demonstrates the ability of the company to cover short-term liquidity needs.
  • FSLR, with its very weak revenue results, has greatly underperformed against the industry average of 0.5%. Since the same quarter one year prior, revenues plummeted by 50.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • FIRST SOLAR INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, FIRST SOLAR INC increased its bottom line by earning $3.90 versus $3.61 in the prior year. For the next year, the market is expecting a contraction of 33.8% in earnings ($2.58 versus $3.90).
  • The share price of FIRST SOLAR INC has not done very well: it is down 7.46% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • You can view the full analysis from the report here: FSLR Ratings Report

If you liked this article you might like

Trump's Solar Tariff Won't Entice U.S. Investment

Trump's Solar Tariff Won't Entice U.S. Investment

Not Everyone Convinced China to Blame For U.S. Solar Woes

Not Everyone Convinced China to Blame For U.S. Solar Woes

Ignore Solar Stock Run, Trump Tariff May Not Be Good for Anybody but First Solar

Ignore Solar Stock Run, Trump Tariff May Not Be Good for Anybody but First Solar

President Trump's Trade War Begins

President Trump's Trade War Begins

Netflix, Procter & Gamble, Whirlpool and Fox - 5 Things You Must Know

Netflix, Procter & Gamble, Whirlpool and Fox - 5 Things You Must Know