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Wall Street’s call for No. 1 solar installer First Solar ( FSLR ) to exceed $3.50 in 2017 earnings might be “too high,” but that year also could mark a trough for the company’s profit, Deutsche Bank analyst Vishal Shah said Tuesday. Shah reiterated his buy rating — while also cutting his price target to 80 from 86 — on First Solar stock ahead of the company’s Q1 earnings report, due out after the close Wednesday. First Solar’s annual earnings are expected to dip 20% to $4.30 in 2016 and by another 18% to $3.53 in 2017, according to the consensus of 21 analysts polled by Thomson Reuters. But Shah sees the company returning to earnings growth in 2018. “We believe First Solar should be in a position to achieve $4.35-$5 (earnings per share) in 2020 in a base case scenario, or as high as $7.30-$8.50 in 2020 in a bull case scenario,” he wrote in a research report. The company’s EPS jumped 37% in 2015 to $5.37. For Q1, the consensus expects First Solar to report $958.3 million in sales, more than doubling year over year, and 90 cents EPS, swinging from a per-share loss of 60 cents in the year-earlier quarter. Both metrics are seen dipping in Q2. But Shah calls First Solar “a relative safe haven in the cleantech sector,” citing a strong balance sheet and robust near-term outlook. For 2016, First Solar’s earlier guidance called for 8% year-over-year sales growth. The company has a 3-gigawatt backlog for 2017-2020 comprised of 2 GW in system sales and 1 GW in module sales. Recent bookings have shifted in conjunction with First Solar’s earlier guidance for 80% modules and 20% systems in incremental bookings. Shah expects First Solar to book 2 GW-3.5 GW in system business for 2017-2020, while shipping 17 GW of modules into internal systems/third module customers. In early afternoon trading on the stock market today , First Solar stock was up 1%, near 61. Shares are down 8% this year but have fared better than IBD’s 20-company Energy-Solar industry group, which is down 27%. First Solar tops the group in terms of market value, with residential installer SolarCity ( SCTY ) and rival solar developer SunPower ( SPWR ) trailing distantly. Together, First Solar and SunPower sponsor yieldco 8point3 Energy Partners ( CAFD ), fourth in market value. Scalper1 News
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