Hapoalim Cuts Price Target on First Solar (FSLR) to $80

November 18, 2008 2:36 PM EST

Hapoalim Securities lowers its price target on First Solar (Nasdaq: FSLR) from $90 to $80, and maintains a Sell rating.

The firm sees weakening average selling prices and order delays or cancellations plaguing the thin-film industry, including First Solar, over the next 3-6 months. This prediction was made after analysts at Hapoalim attended the European Photovoltaic Industry Association's thin-film conference. The firm said it expected to leave the conference with an incrementally more positive sentiment on this area of solar, as the presentations were given by thin-film companies, however, Hapoalim said it walked away with even more conviction in its thesis that solars have more to fall given concerns related to:

1. the sustainability of contracted thin-film volumes in CY09 (due to contract
   delays/cancelations), and
   
2. lower thin-film module average selling prices in CY09, due primarily to increased equity financing for solar projects underpinned by tight debt markets (thereby lowering system level IRRs, thus pushing module
   prices lower), but also higher balance of systems costs driving accelerated downward pricing pressure, and lower photovoltaic crystalline module prices".

As the firm has previously made clear, it believes that the Street still does not fully understand these risks. Specifically, Hapoalim mentions First Solar's shipment targets, revenues and profitability, saying they all could be at risk.

Hapoalim reduced its estimate for First Solar's CY09 output from 305MW to 292MW and its average selling price estimate for CY09 from $2.09/watt to $2.03/watt and for CY10 from $1.67/watt to $1.58/watt. Consequently, the firm lowered its EPS estimate for First Solar's CY09 from $6.32 to $5.65, versus the consensus of $7.38. Also, for CY10, Hapoalim moved its EPS estimate from $7.77 to $6.41.

Shares of First Solar are down 7.1% today, most recently trading at $107.71. Based on the firm's price target, Hapoalim sees First Solar falling another 16% from current levels.

First Solar, Inc. designs, manufactures, and sells solar electric power modules using a proprietary thin film semiconductor technology.

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