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No. 1 solar installer First Solar ( FSLR ) is “firing on all cylinders” after reiterating 2016 earnings guidance late Tuesday despite pushing 200-250 megawatts in projects out to 2017, a Deutsche Bank analyst wrote Wednesday. Both Cuyama and Switch projects will be recognized entirely in 2017, and First Solar plans to delay the latter piece of its 280-MW California Flats project until 2017. Apple ( AAPL ) is a partner in the Monterey County, Calif., project. The lowered guidance followed First Solar’s “solid” Q4 and 2015 sales and earnings beats, Deutsche Bank analyst Vishal Shah wrote in a research report. Shah reiterated his buy rating and 86 price target on First Solar stock. In early trading on the stock market today , First Solar stock rocketed 13% to around 70. SunPower ( SPWR ) stock lifted about 9%, leading shares of jointly-owned yield company 8point3 Energy Partners ( CAFD ), up 3.5%. For Q4 ended Dec. 31, First Solar reported $1.60 earnings per share on $942 million in sales, down 15% and 6.5%, respectively, vs. the year-earlier quarter, but leading analyst expectations for 76 cents and $929 million. First Solar’s 2015 sales and EPS came in at $3.6 billion and $5.37, up a respective 37% and 6%, and leading Wall Street projections for $3.56 billion and $4.51. Delayed Projects Slug Guidance But First Solar lowered 2016 sales guidance to $3.8 billion to $4 billion vs. earlier guidance for $3.9 billion to $4.1 billion. CFO Mark Widmar credited the ITC extension for more flexibility. At the midpoint, sales would be up 8% and EPS down 21% vs. 2015 metrics. The new outlook topped the consensus of 19 analysts polled by Thomson Reuters for $3.8 billion and $4.11. For 2016, First Solar expects to drop the Kingbird, Stateline and Moapa projects (about 440 MW) down to 8point3. Cuyama was originally slated to drop to 8point3 in 2016, but won’t complete until 2017 to leverage the ITC benefits, Widmar said on the call. Congress’ ITC extension shed visibility on sector, CFO Jim Hughes told analysts on the call. First Solar now sees a 20.3 GW potential booking pipeline, up 18% quarter over quarter. The United States represents about 40% of that opportunity vs. 25% in Q3. “The ability to push projects out has given us a little more flexibility in terms of available supply,” Hughes said. Credit Suisse analyst Patrick Jobin retained his neutral rating and 65 price target on First Solar stock, noting component gross margins exceeded 26% in Q4 vs. his expectations for 19.2%. Total gross margins were 24.6% vs. his model for 19.7%. “Importantly, the shipment guidance of 2.9 GW to 3 GW (for 2016) was retained, implying project push-outs are replaced with increased mix of third-party module sales,” he wrote in a report. S&P Capital analyst Angelo Zino continued his buy rating and 75 price target on First Solar stock, noting the greater 2016 visibility. “We believe First Solar is executing well on efficiency and cost reduction efforts aiding higher margins,” he wrote in a report. “We see higher U.S. bookings are more projects are viable post-ITC extension and see competitor struggles as an opportunity.” Scalper1 News
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