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March 31, 2009 – Comments (0) | RELATED TICKERS: STPFQ , FSLR , CSIQ

First Solar: J.P. Morgan Cuts Ests; Advises Taking Profits Posted by Eric Savitz

First Solar (FSLR) may not make its solar cells from polysilicon, but the company is nonetheless feeling the heat from the rapidly crumbling prices for silicon-based solar products.

J.P. Morgan analyst Christopher Blansett this morning slashed his estimates on the company for precisely that reason. “We believe the Street is underestimating the scope of the problems that the solar energy industry and First Solar are facing this year with significantly higher commercial lending rates and lower overall global subsidization driving down demand,” he writes. “We are now thinking of the solar energy sector in terms of a growth cyclical perspective and believe it will take 2-3 quarters to burn off excess inventory.”

Blansett asserts that Street expectations for solar energy stocks remain too high. While many investors expect U.S. government loan programs to have a big impact on solar system demand this year, Blansett writes that he is “more pessimistic on the speed of the federal government and think that solar project financing form this program is more likely to be a 2010 event.” Meanwhile, he adds, the industry is “massively over-supplied,” with a risk of spot module prices falling below $2/watt. Blansett asserts that FSLR will have to cut prices to remain sold out this year, “an obvious negative impact on profitability.”

Blansett slashed his 2009 EPS estimate for FSLR to $4.43, from $5.65. For 2010, he sees $4.77. That puts his estimates far below the Street consensus at $6.58 for this year, and $8.38 for next year.

The analyst also cuts his price target on the stock to $92, from $102. And while he maintains an Overweight rating, he also writes that he recommends investors trim positions on recent strength. “The news of a pending Chinese solar PV subsidy is a great opportunity to use a spike in optimism to lower your exposure to the sector,” he writes. “We believe interested investors will be able to buy solar stocks at lower price points later in the year, potentially at discounted rates on secondary stock issuances as we believe a number of companies will need to raise funds within the next 12 months.”

FSLR today is down $4.14, or 3%, to $132.62.

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Thank you for this report that is precise about the contain. Now once again, those analyst based their comment on feeling and nothing less then that. When you look at the actual spot price we are far from the 2$/w and he forgot to mention the great cost structure (0,98$/w). Also, it is amazing to see an analyst with an overweight advice whereas the target is 30% below the actual stock price.
I hope we will have soon some control on the quality of JP Morgan and all analyst jobs… Because i just think they got hit by this big rally and need to lower the price of the stocks…. to allow their customer to either cover their short or take a long position close to the price before this “rally”.

Also, Q-cells and others confirmed that there is a pickup in demand. And most of the Inventory has been sold off or Write down in the Q4 and Q1 as many small chinese solar company went bankrupt (they were at the origin of the over supply)

Comment by Greg - March 31, 2009 at 10:13 am

Do you EVER have anything positive to write about this sector? Or is writing this blog just a matter of waiting for another analyst to publish a negative report for you to parrot?

Comment by Number2Son - March 31, 2009 at 10:23 am

At least they make money and aren’t overleveraged like so many others.

Comment by delbmarcs - March 31, 2009 at 10:25 am

Do the oil companies pay

How much do the oil companies pay you to deflate the headway made by solar energy companies?

Comment by mike - March 31, 2009 at 10:39 am

First Solar now can make module less than $1 per watt, so module prices falling will have little impact on FSLR. Also, when analysts are downgrading a strong player because of sector, it usually is a good time to buy. When a sector is under pressure, strong player will gain. The lowered estimate will be easier for the player to pass. The trend is that U.S. and China are increasing solar in the coming years. I suggest buy more after analysts drag good solar stocks down.

Comment by Fateagle - March 31, 2009 at 10:40 am

While the world is depending on renewable energy companies to solve the ever-important and imminent environmental issues, it appears Wall Street can’t change its ways and continues to attack “good” companies that seek to make a difference for the planet we live in.

When Wall Street can finally wake up and realize you can do good in the world, and yes, make money at it too by building things instead of trying to knock them down, everybody will be better off for it.

Comment by Bob55 - March 31, 2009 at 10:50 am

This analyst gave a target price 30% down for FSLR, while he sees FSLR’s share price has a 200% up space.

Comment by Solarich - March 31, 2009 at 11:07 am

For solar, STP got another boost. Local gov adds another subsidy on top of the China central gov’s subsidy. Jiangsu province also designated 3 large cities as the bases to initial large scale solar projects. So, STP will speed up for sure.

Comment by Fateagle - March 31, 2009 at 11:15 am

Nice to see analist analized correctly

Comment by BillF - March 31, 2009 at 11:43 am

Wall street bashing the solar sector will continue untill they give up their greedy ways.Americans voted in Nov. for change….and untill real change takes place….the american voter-consumer will vote with their pocket books so don’t look for improvement in the economy any time soon.A friend says ” Iam moving to Flordia and move in to a tent city and pick oranges for less money than illgile mexicans….untill wall street changes….and enjoy the free solar heat”

Comment by westerly - March 31, 2009 at 12:28 pm

Wasn’t J.P. Morgan analysts pumping CDO’s a few years ago? Why on earth would we take them seriously now?

Comment by Marty - March 31, 2009 at 12:38 pm

Que pasa?

Comment by Pepe - March 31, 2009 at 1:20 pm

Cuba si Castro no

Comment by Pepe - March 31, 2009 at 1:22 pm

barrons is a bunch of idiots…..just like the media….only sayin what will benefit them….

p.s. you should probably erase my comment like the media too

Comment by Vansy poozer - March 31, 2009 at 1:31 pm

Goldman had JAVA on conviction sell just to watch it double. FSLR heading for 300

Comment by Rambo - March 31, 2009 at 1:39 pm

FSLR gets another downgrade and the stock is up $2 today. No one trusts the analysts any more.

Comment by sally - March 31, 2009 at 1:39 pm

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