The Sun Shines Bright for First Solar
Tuesday was a good day to be in solar. Especially First Solar (NASDAQ: FSLR), when shares spiked more than 50 percent rising to a new 52-week high and ending the trading day up more than 45 percent at $39.35.
Others in the channel saw more than a little sunshine of their own. JA Solar Holdings Co., Ltd. (NASDAQ: JASO), Sunpower Corporation (NASDAQ: SPWR), Trina Solar Ltd. (NYSE: TSL), Hanwha SolarOne Co., Ltd. (NASDAQ: HSOL), and Canadian Solar, Inc. (NASDAQ: CSIQ), all experienced double-digit percentage spikes in their stocks.
The queen (or king) bee of the solar hive, however, was First Solar with the main trading trigger, lots of warm, sunny guidance from the company who said it expects to earn between $4 and $4.50 per share moving forward, with annual sales between $3.8 billion and $4 billion.
This guidance was well above analysts’ forecasts. That expectation according to Thomson Reuters included earnings of $3.51 per share on revenue of $3.1 billion for 2013.
Another factor in the surge was a short squeeze precipitated by a large number of buyers rushing in to cover their positions. Tuesday likely saw quite a few “Uh oh,” buys as First Solar shares rose higher and higher.
In addition, The Wall Street Journal reported that First Solar plans to acquire San Jose, Calif.-based TetraSun Inc. and start making solar panels using that company’s innovative silicon technology.
Discussing the proposed acquisition in a webcast, First Solar Chief Executive, James Hughes said, "We believe in the company, we believe in the industry [and] we believe that the energy world is just beginning to understand the capabilities of photovoltaic products."
Finally, news reported by Bloomberg, that JX Nippon Oil and Energy Corp., Japan’s largest refiner, was in the beginning stages of talks with First Solar regarding a possible partnership to distribute the American solar panel makers’ products in Japan.
JX Energy, part owner in TetraSun, said it has decided to sell its stake in TetraSun because of First Solar’s capability to mass-produce. Japan is expected to become the largest solar market after China in 2013, according to estimates by Bloomberg New Energy Finance.
Some analysts expressed skepticism about First Solar's optimistic predictions for 2015 earnings, which were based to some extent on power plant sales for which contracts have not been signed.
First Solar CEO, Hughes, however, said he was confident First Solar would reach its goals, given the growing level of demand in the global solar market.
At the time of this writing, Jim Probasco had no position in any of the mentioned equities.
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