Analysts from UBS expressed their views on solar energy company First Solar, Inc. (NASDAQ:FSLR) and insurance company Genworth Financial Inc (NYSE:GNW) following mixed earnings results from each. One analyst remains neutral on First Solar, pointing to recent success combined with unclear revenue recognition and bookings guidance. The other tells investors to steer clear of Genworth due to an unfavorable cash position. Let’s take a closer look.

First Solar, Inc.

Analyst Julien Dumoulin Smith of UBS weighed in on First Solar after the company posted first-quarter earnings last week. The analyst attributes the “solid” results to completion of various projects as well as revenue recognition of others. Furthermore, the sale of a large stake of its Desert Stateline solar facility to Southern Solar was also reflected in the Q1 earnings and should continue near-term. However, the analyst notes that “mgmnt cautioned against reading too much into lack of substantive guidance increase given a number of moving parts on project recognition.”

Related, the analyst warns that guidance for the rest of 2016, which includes the transfer or Stateline and Moapa assets, “could prove lumpy” depending on how CAFD, the company’s yieldco, handles larger acquisitions. He continues, “Implied capital needs for these dropdowns could shift management strategy around dropdowns and we continue to see potential for ROFO swap out later in the year.”

Despite unclear guidance, the analyst is hopeful on the company’s recent increase in bookings, “which could indicate a pickup in conversion.” Similarly, international module agreements have increased particularly in India and Honduras. According to the analyst, these increases could bode well in investors’ eyes, but not without caution. He explains, “Increased color around potential 2017 bookings could help investors gain some more comfort on next year’s earnings, but we expect some skepticism.” He continues, “Further we see the CEO exit and interim appointment as a cautious datapoint.”

The analyst reiterates his Neutral rating on the stock and downgrades his price target to $59 from $64. Julien Dumoulin Smith has a 53% success rate recommending stocks with an average return of 4.2% per recommendation.

According to TipRanks, out of all the analysts who have rated the stock in the last 3 months, 47% are bullish while 53% remain on the sidelines. The average 12-month price target for the stock is $70.85, marking a 27% upside from where shares last closed.


Genworth Financial Inc

UBS analyst Suneet Kamath commented on Genworth Financial after the company posted Q1 earnings last week. The company posted net income of $53 million vs estimates of $70 million, but surpassed earnings per share estimates of $0.14, posting $0.21 per share. Genworth also reported higher than expected long term care income of $34 million vs the analyst’s expected $13 million. However, the analyst believes “the outlook for GNW’s holding company cash and capital position will be more important drivers of the stock, relative to EPS results.” As a result, the analyst reiterates a Sell rating and a $1.50 price target on the stock.

The analyst explains, “We show the drivers of the q/q change and would highlight three items. First, Net Other Items (NOI) was -$71M in 1Q:16. Previously, GNW guided to NOI of -$70M for the full year, implying NOI needs to be positive on a cumulative basis for the rest of the year. Second, GNW was required to post $67M of cash collateral against hedges used for its hybrid debt. Prior to its recent downgrade, GNW had been able to satisfy this requirement with U.S. Treasuries. We understand this cash position will be marked each quarter, and the cash requirement will fluctuate with interest rates. Lastly, subsidiary dividends were $60M, which represents 48% of the mid-point of FY 2016 guidance (i.e., $100-150M), which suggests only another ~$65M for the balance of 2016, unless GNW raises its FY target. To us, GNW’s holdco cash position is tighter and has potentially more volatility than previously thought.”

According to TipRanks, out of the 3 analysts who have rated the company in the past 3 months, 1 gave a Buy rating, 1 gave a Sell rating, and 1 remains on the sidelines .The average 12-month price target for the stock is $2.83, marking a 17% downside from where shares last closed.