Glutton for punishment FSLR

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Last month First Solar said it has set a new record for the efficiency—the percentage of energy in sunlight converted to electricity—of cadmium-telluride cells, at 22.1 percent in devices produced in its research lab (see “First Solar’s Cells Break Efficiency Record”). In the field, First Solar’s cells have reached nearly 17 percent efficiency, comparable to silicon-based solar panels. While silicon has traditionally been more efficient than cadmium-telluride, First Solar’s recent results indicate that its cells are rapidly surpassing silicon.

The company spends about 4 percent of its revenues on research and development, nearly twice the solar industry average.

As the chart below shows, multi-crystalline silicon solar cells (which represent about 80 percent of the silicon market) have stalled at around 20 percent efficiency for research cells in the lab, which converts to about 16 percent in the field. Earlier this month, First Solar said that its cells could reach 24 percent efficiency within two years and that in real-world operation its panels could hit 19 percent in three years. Cadium-telluride is especially effective in hot, humid regions, such as the U.S. Southeast and South Asia, where much of the growth in the utility-scale solar market is expected to happen in the coming years.

Thin-film cells are also easier to make. First Solar’s vapor deposition process takes about three and a half hours to make a solar panel, from clean sheet of glass to finished product. Making conventional silicon panels requires first baking the silicon in a high-temperature furnace and can take more than two days from start to finish. Focusing on efficiency improvements and manufacturing innovations, First Solar has succeeded where other cadmium-telluride solar panel makers have failed. In 2013 First Solar acquired GE’s technology after GE canceled plans for a $300 million plant in Colorado.  Guggenheim Securities research analyst Sophie Karp estimates that silicon panels cost from 69 to 80 cents per watt to manufacture; thin-film cadmium-telluride ones cost from 60 to 70 cents. That means that, for First Solar, there is a simple calculation: more-efficient panels manufactured at lower cost than its conventional rivals.

How First Solar Is Avoiding the Industry’s Turmoil

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Technically, not all is well:

There’s still hope for beaten-down bulls because the decline is holding at four-month range support near 57 (black line). A filled gap, followed by a rally above 62, would shift the technical equation and signal a failed breakdown that could attract additional buying interest. While that’s speculative given bearish short-term action, On Balance Volume (OBV) has maintained an accumulative pattern through the recent decline, pointing to hidden strength in the form of loyal shareholders.

The Bottom Line

First Solar has entered a downtrend after failing to break out above two-year rectangle resistance in the mid-70s. This week’s breakdown through the 200-day EMA adds to growing bearishness, but the stock still shows healthy accumulation while it clings to short-term support in the mid-50s. These elements have the power to end the decline but a rally above 62 is needed to confirm a higher low.

[admin]

One of Wall Street’s biggest solar bears is back at it. Axiom’s Gordon Johnson, who correctly predicted the downfall of SunEdison in 2016, initiated First Solar, Inc. FSLR 4.39% at a sell in a note on Tuesday and announced a $21 price target for the stock. In a subsequent appearance on Benzinga’s Pre-Market Prep show, Johnson highlighted the fact that the six large legacy projects the company has used to bolster earnings in recent years are now gone. “The company has had — quite geniusly, I might add — a number of projects that allow them to report earnings that we believe were much higher than what [would] have been reported,” Johnson said. For years, the major risk in shorting First Solar was the existence of these legacy projects bolstered by power purchase agreements. These projects allowed the company to “defer high-quality revenue and margins to future periods, providing years of EPS buffer during earnings down-cycles,” according to the note.

Wall Street's Biggest Solar Power Bear Thinks First Solar Is Headed For A 'Dark Age' | Benzinga

it has had a consistent positive net cash position for over a decade. This healthy net cash position is enabled by First Solar's strong fundamentals, as well as its market positioning decisions. The United States made up 87% of First Solar's more than $3.5 billion in revenue in 2015. While one could argue that deriving such a large portion of revenue from a single market can be dangerous, the U.S. market has enormous potential - especially after the recent Investment Tax Credit expansion. The Solar Energy Industries Association is forecasting 119% growth in installations in 2016, with utility scale solar (FSLR's bread and butter) representing 74% of that growth.

The Future Of First Solar - First Solar, Inc. (NASDAQ:FSLR) | Seeking Alpha

First Solar shares plunged as much as 15 percent in extended trade. The company offered new financial guidance for 2017 revenues between $2.5 billion and $2.6 billion. Analysts were, on average, looking for about $2.98 billion. It expects between a break even and earnings of 50 cents a share in 2017, while analysts expected EPS of $1.94. First Solar also announced product changes and restructuring charges, saying it expected to cut 1,600 jobs.

After-hours buzz: NTAP, CSCO, FSLR & more

First Solar will have around 1GW of capacity available of the new series 5 in 2017, which will improve its cost competitiveness at a time of falling ASPs. There is still however, 2GW of series 4 modules that need to be sold. Management noted that series 4 sales will be focused on hot, humid climates due to its temperature coefficient advantages over c-Si. Management is moving carefully in selecting market opportunities that still have healthy margins.

First Solar - 2017 Concerns And Beyond - First Solar, Inc. (NASDAQ:FSLR) | Seeking Alpha

First Solar Inc. (NASDAQ: FSLR) saw short interest slip by 2.1% to 17.04 million shares, which represents about 22.3% of the company’s float. Days to cover rose from four to seven. In the short interest period, the stock’s share price rose by nearly 9%. Its 52-week trading range is $28.60 to $74.29, and it closed at $33.99 on Tuesday, up about 4.2% for the day. SunPower Corp. (NASDAQ: SPWR) short interest decreased by 0.9% to 16.99 million shares, or 29% of the company’s float. In the two-week period, the share price rose by 3.5%. The stock’s 52-week range is $6.00 to $30.75, and it closed at $7.24 on Tuesday, up about 5.9%. Days to cover fell from nine to five.

Short Interest in Solar, Alt Energy Stocks Drops - First Solar (NASDAQ:FSLR) - 24/7 Wall St.

[admin]

Good article about the FSLR/SPWR yieldco

However, the downside risk is that, as an income growth stock, 8Point3's thesis is living on borrowed time. If the share price can't rise by the end of 2018, then the yieldCo is going to remain priced out of its growth potential, creating a potentially self-fulfilling prophecy in which weak share prices create the very lack of growth that caused the share prices to be weak in the first place. That's especially true if the strategic review takes more than a quarter or two, since the uncertainty created by the potential change in sponsors could cap the potential upside to shares.

8Point3 Energy Partners Earnings Bombshell: What Investors Need To Know - 8point3 Energy Partners LP (NASDAQ:CAFD) | Seeking Alpha

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A trade complaint asking the Trump administration to impose tariffs on solar panels could devastate the U.S. industry, wiping out two-thirds of solar systems forecast to be installed over the next five years, according to a report Monday by GTM Research. The case, filed by bankrupt panel manufacturer Suniva Inc., would cause equipment prices to spike in the U.S. and prompt installations to fall to as low as 25 gigawatts from 2018 to 2022, down from GTM’s current forecast of 72.5 gigawatts, GTM said. The report is the first on how tariffs may affect the industry.

Tariffs on Solar Panels Could Slow Industry Growth by 66% - Bloomberg

JMP Securities analyst Joseph Osha upgraded First Solar (FSLR) to Market Perform, saying that a petition regarding foreign-manufactured crystalline silicon cells and modules filed with the U.S. International Trade Commission, or USITC, by Suniva could benefit the company. Additionally, the analyst believes First Solar will be able to move product into the U.S. without facing tariffs.

Trump Effect: Analyst ups First Solar on trade petition potential FSLR;SPWR;CSIQ;SUNEQ;JASO;TSLA;TSL;YGE - The Fly

[admin]

First Solar, Inc. (NASDAQ:FSLR) has suffered a steady price decline since announcing its decision to skip production of the Series 5 module in November 2016 due to the rapid price declines in competitor PV modules. The Series 5 was not going to be price competitive by the time it could be produced in commercial quantities, so FSLR opted to advance the development and commercialization of the Series 6.

First Solar: Be Wary Of A Backlog Drop In Q1 Earnings - First Solar, Inc. (NASDAQ:FSLR) | Seeking Alpha

Stocks trade on catalysts, disclosures or developments that drive stock prices up or down. FSLR is facing an 18-month long transition period (see page 5 of the Q4 Earnings Presentation, see above), an eternity in a commoditized industry where prices can decline more than 20% in a quarter. There is likely only one positive catalyst that could sustain a stock price recovery from these levels: a significant advancement in the production start date of the Series 6 in Malaysia. Without this catalyst, the stock is likely to languish for the next 12 months or until uncertainty surrounding the competitiveness of the Series 6 abates.

First Solar: Be Wary Of A Backlog Drop In Q1 Earnings - First Solar, Inc. (NASDAQ:FSLR) | Seeking Alpha

Most significantly, our Series 6 module will utilize essentially the same underlying solar cell technology as our Series 4 product. Given this, we believe the core technology risks involved in the transition is low. The analogy we have used in the past is that this is similar to what and how the flat panel display industry scale from one generation to the next. We are not reinventing the core technology behind Series 6, but rather increasing the module form factor.

First Solar (FSLR) Q4 2016 Results - Earnings Call Transcript | Seeking Alpha

In a similar matter, but external to the company, we are leveraging the expertise of the long-trusted equipment supplier for our core product technology tools. In some cases, we have been working with these suppliers for nearly a decade and their capabilities are well established and proven. While there clearly are risks associated with scaling to a larger form factor, we see these risks as manufacture-related in nature and not technology centered. While manufacturing risks such as throughput and yield could possibly impact the Series 6 launch, our experience indicates that overcoming these types of challenges can be addressed with a proper focus and resources. From a performance standpoint, we are focused both on reaching our target of greater than 18% efficiency as well as continuing our existing standard of excellence and reliability that our customers have come to expect. While our target efficiency represents a greater than 100-basis-point improvement from our current fleet performance, the path to achieve this performance is largely based on proven and well-understood methods that we will now be able to deploy on our new Series 6 equipment addressing certain limitations in our existing toolset.

First Solar (FSLR) Q4 2016 Results - Earnings Call Transcript | Seeking Alpha

[admin]

We have a new article out on First Solar:

The Q3 figures from First Solar were very well received. At first sight, it was a little difficult to perceive what exactly caused the shareholder enthusiasm. Yes, there was a big quarterly beat, but quarter to quarter business is volatile and the yearly outlook didn't change all that much. We delve into this and will argue that it's a combination of things.

First Solar: What Moved It Higher? - First Solar, Inc. (NASDAQ:FSLR) | Seeking Alpha