We have maintained our Neutral recommendation on
First Solar, Inc.
) on Sep 26, 2013.
Why the Reiteration?
First Solar caters to a diverse range of customers consisting of
investor-owned utilities, independent power developers and
producers, commercial and industrial companies, and other system
owners. The company's effort to improve the quality of its
products while diversifying its geographical base is
Though First Solar's solar cells convert sunlight to
electricity less efficiently than traditional silicon
photovoltaic (PV) modules, thin film PV cells have an advantage
in producing electricity even in lower light. The ability to
produce electricity under a wide range of light conditions makes
these cells attractive for utility companies that require stable
large-scale, utility-sized renewable energy production.
Though First Solar is facing intense competition, it will be able
to develop economically sustainable businesses as it has
established its expertise and developed meaningful PV generation
solutions in other areas of the solar value chain, such as,
project development, EPC capabilities, and O&M services.
First Solar has a strong balance sheet in the solar industry with
a debt-to-equity ratio of 4.7% (Zacks Industry average was 61.8%)
and $928.7 million of cash gives it a distinct advantage over its
Despite the positives, we remain concerned about the volatile
euro, apprehension over a reduction in German subsidies, and the
glut of modules in the market. The structural imbalance between
higher production capacity and current and near-term future
expected global demand is expected to continue.
This would, therefore, put pressure on pricing and affect
results through the remainder of 2013 and into 2014. During the
second quarter, the company posted weak results due to lower
revenue recognition from the AVSR project.
FIRST SOLAR INC (FSLR): Free Stock Analysis
JA SOLAR HOLDGS (JASO): Free Stock Analysis
JINKOSOLAR HLDG (JKS): Free Stock Analysis
SUNPOWER CORP-A (SPWR): Free Stock Analysis
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Other Stocks to Consider
First Solar presently has a Zacks Rank #3 (Hold). Stocks that are
worth considering in the space are
JA Solar Holdings Co., Ltd.
JinkoSolar Holding Co., Ltd.
). While SunPower Corp. carries a Zacks Rank #1 (Strong Buy), JA
Solar Holdings and JinkoSolar Holding hold a Zacks Rank #2