First Solar (FSLR) Upgraded to 'Positive' at Susquehanna Following Management's Positive Commentary on Module Demand and Pricing

August 2, 2021 9:25 AM EDT
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Price: $104.02 +0.71%

Rating Summary:
    14 Buy, 21 Hold, 8 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 7 | Down: 15 | New: 24
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Susquehanna analyst Biju Perincheril upgraded shares of First Solar (NASDAQ: FSLR) to “Positive” from “Neutral” after the company’s management delivered positive commentary on module demand and pricing.

The price target is also hiked to $120.00 per share from $89.00 as the analyst explains the prior PT and rating were predicated “on margin contraction due to declining module ASPs.”

“Continued decline in module ASPs was the primary reason why we had remained on the sidelines on FSLR. Higher c-Si panel prices and potential supply chain disruptions stemming from Xinjiang forced labor concerns appear to be translating to higher demand and pricing power for FSLR’s thin-film panels. Company’s modules segment backlog figures (from 10Q) suggest recent bookings are in the high $0.20s range. While 2022 module prices are already set, recent strength suggests prices could be flat y/y in 2023 and perhaps show an uptick in 2024. We are currently modeling average ASPs of $0.32/W this year, declining to $0.285 next year, then holding flat in 2023, and inching up to $0.29 in 2024,” the analyst said in a note.

Strong demand has likely led to the decision to build a new manufacturing facility in India.

“Management indicated on the call that 2023 sales could be in the vicinity of 13 GW with both the OH and India plants commencing operations during the year. We are assuming 12 GWs of module sales in 2023, and could increase to 14-15 GW range the following year with both plants fully ramped up, or a near doubling of 7.6 GWs shipments we’re modeling this year.”

As a result, the analyst raised '21/'22/'23 EPS estimates to $3.72/$0.23/$1.90 from $4.19/$2.93/$2.92, respectively.

First Solar released Q2 earnings to deliver earnings per share (EPS) of $0.77, higher than the $0.55 consensus.

Shares of the company are up 3% in pre-open Monday.

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