The Expert Opinion On First Solar's Q3

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First Solar, Inc. FSLR shares tumbled 15 percent Thursday after the company reported below-par third quarter revenues and guided revenues below the consensus expectations.

First Solar Could be Profitable Next Year

JMP said the company could be profitable the next year, although it believes consensus expectations are too high. The firm noted that the company is taking aggressive steps to reposition its cost structure in a very tough pricing environment.

The firm thinks the bottom line outperformance relative to estimates was due to the consensus estimates not accounting for non-operating factors.

As such, the firm maintains its 2016 earnings per share estimate, but raised its 2017 estimate by a penny to $1.35.

Margins, Modules and Mix in Flux

Goldman Sachs noted that the company's margins, modules and mix are in a flux ahead of 2017. Analyst Brian Lee is updating his model to reflect the timing of system sales and higher gross margins.

Quality of 3Q Beat Was Not That Impressive

Deutsche Bank said the quality of third quarter beat relative to guidance is not all that impressive, with the upside coming from lower tax rate. The firm believes the 10-cent implied earnings impact from the push out of CA Flats and Moapa into 2017 is below its guidance of $0.75. The firm also noted the company's announcement that it would provide more information on the capacity ramp up being currently evaluation on the 2017 guidance call, scheduled for November 17.

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The Good, the Bad and the Ugly of First Solar's Results

Janney termed the better than expected third quarter results as the Good, the drop in potential booking opportunities as the Bad and likely earnings challenges deep into 2018 stemming from the acceleration in Series 6 development the company is contemplating to circumvent the drop in global c-Si module pricing trends as the Ugly.

Summary of Ratings & Price Targets

  • JMP – Market Underperform, with $32 Price Target
  • Goldman Sachs – Neutral
  • Deutsche Bank – Hold , with $44 Price Target
  • Janney – Neutral, with $48 Price Target (Buy, $68 Previously)
  • Oppenheimer – Perform (Downgraded from Outperform)
  • Roth Capital – Neutral (Downgraded from Buy); Price Target Lowered to $55 from $75
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