Jefferies Comments on First Solar (FSLR) Following Desert Sunlight, Antelope Vally DoE Guarantees, Sales
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Price: $214.28 +0.10%
Rating Summary:
37 Buy, 18 Hold, 4 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
37 Buy, 18 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Jefferies comments on First Solar (Nasdaq: FSLR) following U.S. Department of Energy (DoE) loan guarantee news late Friday. The firm kept its Buy rating and $125 price target on First Solar.
At the 11th hour, the DoE issued two guarantees for First Solar's Desert Sunlight and Antelope Valley Solar Ranch projects. Desert Sunlight is a 550-MW project, while Antelope Valley should produce 230-MW of solar power.
The DoE guaranteed $1.46 billion for Desert Sunlight, shy of the $1.88 billion prior conditional commitment.
For Antelope, the project got a $646 commitment, slightly below the $680 million initially expected.
Further, First Solar sold Desert Sunlight to NextEra (NYSE: NEE) and General Electric (NYSE: GE), and Antelope to Exelon (NYSE: EXC). Desert Sunlight's sale price was not disclosed, but Jefferies notes that Antelope sold for significantly more than expected. Commenting on the move, Jefferies said, "Revenue recognition for Sunlight may be at risk, which is a modest negative, but the 2 projects are financed and sold. On the margin, these announcements are a positive."
On Antelope, Jefferies said the sales price "implies a project price of ~$5.90/W AC, $4.95/W DC, well above our prior estimate of $3.75/W DC. The higher price implies ~$3.30 additional earnings to our current EPS estimates, over the ~2 years of the buildout (276MW DC *$1.20 * (1-15% tax) / 86M shares)."
On the potential Desert Sunlight sales price, Jefferes comments, "To be conservative, we estimate the project price was ~$3.50/W; this assumes the loan guarantee covered 80% of a total loan amount of $1.825B, and equity was 20%. This translates to a total project price of $2.28B, or ~$4.15/W AC, or $3.50/W DC. However, the total debt and equity amounts may be different from our assumptions. On Sept. 22 we published that a $0.25/W change in project price for Sunlight would impact EPS by only $1.60 (660MW DC * $0.25 * (1-15% tax) / 86M shares) over the 2-3 years of the buildout."
Click here for more analyst color on First Solar, or here for a ratings history.
First Solar is down 3.7 percent Monday.
At the 11th hour, the DoE issued two guarantees for First Solar's Desert Sunlight and Antelope Valley Solar Ranch projects. Desert Sunlight is a 550-MW project, while Antelope Valley should produce 230-MW of solar power.
The DoE guaranteed $1.46 billion for Desert Sunlight, shy of the $1.88 billion prior conditional commitment.
For Antelope, the project got a $646 commitment, slightly below the $680 million initially expected.
Further, First Solar sold Desert Sunlight to NextEra (NYSE: NEE) and General Electric (NYSE: GE), and Antelope to Exelon (NYSE: EXC). Desert Sunlight's sale price was not disclosed, but Jefferies notes that Antelope sold for significantly more than expected. Commenting on the move, Jefferies said, "Revenue recognition for Sunlight may be at risk, which is a modest negative, but the 2 projects are financed and sold. On the margin, these announcements are a positive."
On Antelope, Jefferies said the sales price "implies a project price of ~$5.90/W AC, $4.95/W DC, well above our prior estimate of $3.75/W DC. The higher price implies ~$3.30 additional earnings to our current EPS estimates, over the ~2 years of the buildout (276MW DC *$1.20 * (1-15% tax) / 86M shares)."
On the potential Desert Sunlight sales price, Jefferes comments, "To be conservative, we estimate the project price was ~$3.50/W; this assumes the loan guarantee covered 80% of a total loan amount of $1.825B, and equity was 20%. This translates to a total project price of $2.28B, or ~$4.15/W AC, or $3.50/W DC. However, the total debt and equity amounts may be different from our assumptions. On Sept. 22 we published that a $0.25/W change in project price for Sunlight would impact EPS by only $1.60 (660MW DC * $0.25 * (1-15% tax) / 86M shares) over the 2-3 years of the buildout."
Click here for more analyst color on First Solar, or here for a ratings history.
First Solar is down 3.7 percent Monday.
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