Deutsche Bank Remains Sidelined on First Solar, Inc. (FSLR) Ahead of Q3 Results; Anticipates Cut in 2016 Guidance

As First Solar, Inc. (NASDAQ:FSLR) readies to soon release its third-quarter earnings likely sometime in November, Deutsche Bank analyst Vishal Shah anticipates downside risk to the solar manufacturer’s 2016 guidance, which currently assumes the sale of projects CA Flats and Moapa.

However, though the delay of FSLR’s 17% Stateline stake sale from the second half of 2017 to 2017 coupled with delayed sales of CA Flats and Moapa projects until 2017 might not bode well for this quarter, Shah notes these project push outs could result in a 2017 guidance beat.

Yet, it is certainly possible management will reduce its 2016 guidance, considering that the estimates currently assume the sale of FSLR’s CA Flats asset in the late third or by fourth quarter and Moapa in fourth quarter.

Ahead of the quarterly print, the analyst reiterates a Hold rating on shares of FSLR with a $44 price target, which represents just under a 5% increase from where the stock is currently trading.

The analyst expects 2016 EPS guidance could be considerably cut from a range of $4.20 to $4.50 down to $2.80 to $3.10. Though a significant reduction in the near-term, Shah contends that coupled with the Kingbird and India projects, “This push-out could potentially help 2017 EPS,” prospectively realizing 2017 EPS guidance of approximately $2.30 at the midpoint.

Shah believes, “There is significant uncertainty with respect to timing and structure of these asset sales and considering the fact that Moapa is no longer on the ROFO list of 8.3 we believe FSLR has a lot of flexibility with respect to structuring. We see some risk to both of these asset sales and expect ~$1.40 EPS imp ct from the push out of these projects into 2017.”

“Although expectations have been generally low and we expect the company to lower 2016 guidance, improving supply/demand outlook as well as increasing prospects of a Democratic Presidential win during the upcoming US elections could limit near term down side and even potentially drive near term positive momentum, in our view,” Shah concludes.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Vishal Shah is ranked #4,073 out of 4,180 analysts. Shah has a 26% success rate and faces a loss of 22.1% in his annual returns. When recommending FSLR, Shah loses 24.4% in average profits on the stock.

TipRanks analytics indicate FSLR as a Buy. Based on 15 analysts polled in the last 3 months, 5 rate a Buy on FSLR, 9 maintain a Hold, and 1 issues a Sell. The 12-month price target stands at $52.14, marking a nearly 24% upside from where the shares last closed.screen-shot-10-21-16-at-04-55-pm

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