Axiom Maintains Bearish Expectaions On First Solar Ahead Of 2Q14 Results; Reduces PT To $28


Axiom analyst Gordon Johnson was out today with some bearish comments on First Solar (FSLR), reiterating his Sell rating and reducing his price target to $28 price (from $29), ahead of FSLR’s second quarter earnings results.

Johnson commented: “Why the pessimism? Well, just as the Street has FSLR’s rev/EPS figures collapsing from $950mn/$1.10, respectively, in C1Q14, to just $795mn/$0.32 in C2Q14 (due to the fact that FSLR closed the sale of its Campo Verde project in C1Q14, for which nearly 100% of the project construction was complete, meaning FSLR could recognize all of the associated rev & 100%-gross-margin-develop-fee-rev in C1Q14, yet will not have this benefit in C2Q14), we see FSLR fully exhausting its company-owned projects by C1Q16; when this happens, which we see as inevitable, we see FSLR’s rev/margins/earnings moving considerably lower. This is the risk we feel FSLR’s stock, sitting at $62.03/shr (15x/46x our 2015/2016 EPS ests), is ignoring. As investors better appreciate this forthcoming headwind, which could conceivably happen at any time, we see considerable downside to FSLR’s stock”.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Gordon Johnson has an 11.1% average return and a 56.6% success rate. Johnson has a 15.9% average return when recommending FSLR, and is ranked #351 out of 3200 analysts.

For more ratings news on FSLR click here.
 

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