UBS Reiterates Neutral on First Solar (FSLR) Following 3Q
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UBS reiterated a Neutral rating and $45.00 price target on First Solar (NASDAQ: FSLR) following the company's 3Q earnings report. UBS expects that primary investor focus will remain on the upcoming 2017 guidance call and see the Cal Flats/Moapa disclosures as the most challenging datapoint to overcome near term. Current guidance implies ~$50M of gross margin at best from Cal Flats and Moapa, though there is some room for improvement if the Cal Flats tax decision is resolved favorably.
Analyst Julien Dumoulin-Smith commented, "Although FSLR raised EPS guidance on the call, the significant increase in gross margins coupled with a $1B reduction in revenue as California Flats and Moapa are pushed out raise questions around upcoming 2017 guidance. The company currently has ~550MW booked in 2017 systems with near term expectations for 50-150MW more, though margins on the ~380MW of projects from Cal Flats and Moapa are potentially flat margin contributors next year. Net/net the implication that a substantial portion (up to ~2GW+) of earnings will come from modules/components leaves us increasingly cautious on 2017 and reinforces our recent downwards revision."
Shares of First Solar closed at $40.58 yesterday.
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