Analyst Round-Up First Solar (FSLR): Analysts Still Seem Cautiously Bullish

October 29, 2009 2:13 PM EDT

Today, shares of First Solar (Nasdaq: FSLR) are getting beaten-down the most since February on the back of disappointing Q3 results and guidance and the ensuing analyst reaction. The stock is currently down 16.4% to $126.76.

Amid the numerous estimate reductions and, in turn, lowered price targets, we have three downgrades: one from Wedbush, one from BofA Merrill Lynch, and one from Caris & Co.

Elsewhere on the Street:

• Deutsche Bank said that "First Solar reported 3Q09 results that fell short of inflated expectations as pricing pressure drove higher rebates than originally expected." Although the company's sales guidance for next quarter met the Street's estimates, Deutsche points out that gross margin missed as First Solar's lower margin segments will likely weigh on the stock moving forward. The firm expects pricing pressure to continue next year, but at a more moderate pace. Maintains Hold, lowers target from $125 to $115.
  
• Janney Montgomery Scott called First Solar's Q3 results "solid" and noted that "while the lower revenue was a slight disappointment, we do not view it as a cause for concern and believe it will be made up in the fourth quarter." The firm said its thesis (that First Solar will remain the low-cost, trusted leader moving forward) is still intact. Maintains Buy and $185 price target.
  
• Kaufman Bros. mentioned the top line miss but EPS beat, and the higher Q4 sales guidance with lower margins. The firm said that First Solar is "pricing to maintain market share". Maintains Sell and $86 price target.
  
• Collins Stewart attributed the Q3 weakness to: 1. the rebate program announced after 2Q09 weighing more heavily-than-expected on ASP and margins, and 2. a deferral of $58M of revenue on a project being built in Canada, well above the $20M revenue deferral expected". The firm raised its Q4 sales estimate from $560 million to $576 million and lowered its EPS estimate from $1.93 to $1.55. Notably, Collins Stewart made no change to its FY10 estimates. Maintains Hold.
  
• Hapoalim Securities said the miss for the quarter and guidance were "due to 'robust' peer pricing pressure and significantly lower than expected Engineering Procurement & Construction margins; while we see risk of multiple compression over the n-term, given aggressive pricing from FSLR's Chinese solar PV peers, we see outsized risk to FSLR's ability to execute in CY10." Maintains a Sell and $90 price target.

Following the earnings and today's sell-off, 16 analysts have a Buy on the stock, 20 have a Hold and just 4 have a Sell. Further, according to Bloomberg data, analysts, on average, have a $150 price target on shares of First Solar. Analyst sentiment is clearly still cautiously bullish...

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• Deutsche Bank
• Kaufman Bros.
• Merrill Lynch
• Banc of America
• Collins Stewart
• Janney Montgomery Scott

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