JMP Securities: 2017 Consensus Estimates For First Solar Are Significantly Too High

JMP Securities sees the consensus estimates of $2.22 EPS on revenue of $2.97 billion on First Solar, Inc. (NASDAQ: FSLR) for the year 2017 as significantly too high. Conversely, analyst Joseph Osha expects the company to deliver GAAP EPS of $1.34 for the same period.

Following its participation in the Solar Power International, the brokerage feels First Solar is in line with cost cutting measures for the year 2017. JMP believes the company could maintain its market position even if the margins come under pressure.

As a result, Osha values First Solar with 4x 2017 EV/EBITDA and free cash flow. Based off these figures, the analyst came to the target price of $32 and rated the stock Market Perform. This implies a downside potential of about 7.5 percent from the current levels.

In a research note, the brokerage viewed, "First Solar is toggling to its fifth-generation product quickly, and a number of racking and tracker vendors were showing the product as well. The transition is straightforward as it is simply a reconfiguration of the existing panel assembly process, but the result is a product that installers, in particular, seem to like."

The analyst does not expect any revenue from generation-six product until the year 2018, saying none of First Solar sales personnel has even seen the product. The company is also not in a hurry to make significant investments in the generation-six panels.

At time of writing, the stock was down 2.33 percent at $34.53.

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