First Solar Shines

It has been a challenging earnings season for solar stocks overall, but First Solar has managed to emerge as a bright spot, offering a glimmer of hope during these uncertain times.

Standout Performance

Shares in the largest solar manufacturer in the country saw a significant 6% jump ahead of the market open on Wednesday, standing out from the lackluster post-earnings performances of its competitors. While companies like SolarEdge, Sunrun, and SunPower experienced drops ranging from 12% to 18% after reporting their earnings, First Solar managed to buck the trend.

Positive Outlook

Enphase Energy also stood out from the crowd, experiencing a notable 17% surge following optimistic comments from CEO Badri Kothandaraman, who believes that the first quarter will mark the low point for the market.

Industry Challenges

The solar sector has been facing challenges due to rising interest rates, which have deterred consumers from investing in home and commercial installations, resulting in subdued demand across the board.

Bright Future Ahead

First Solar's outlook stands out as a beacon of hope within the industry. In its recent earnings report, the company projected full-year earnings in the range of $13 to $14 per share, exceeding Wall Street's consensus of $13.26 per share. This represents a growth rate between 68% and 81%.

Revenue Growth

The company anticipates revenue for 2024 to fall within the range of $4.4 billion to $4.6 billion, indicating growth between 33% and 39%, in line with analyst expectations of $4.55 billion in sales.

Impressive Pricing Power

One aspect that particularly impressed Wall Street was First Solar's pricing power. The company disclosed that the average selling price (ASP) for new bookings has increased to 31.8 cents per watt, up from 30 cents in the previous quarter.

Analyst Views on First Solar

KeyBanc Capital Markets analyst Sophie Karp expressed that a “positive development given the soft global pricing environment” is a positive sign for First Solar. Despite this, she maintained a Sector Weight rating due to "lingering macro uncertainties related to pricing and policy trajectory."

Mizuho Takes a Bullish Stance

On the other hand, Mizuho analysts are more optimistic about the stock, giving it a Buy rating. They do anticipate prices to drop below 30 cents per watt in the first quarter, yet Maheep Mandloi stated that "even under our assumptions of lower bookings ASP, valuation looks attractive." He has set a price target of $196, which hints at a 35% upside compared to Tuesday’s closing price.

Positive Momentum for First Solar

The pricing momentum observed for First Solar is propelling the company towards a promising future, as highlighted by Evercore ISI analysts. They emphasized that First Solar is among the U.S. solar manufacturers best positioned to capitalize on the implications of the Inflation Reduction Act. With an In Line rating (equivalent to Neutral), they have set a price target of $227.

Mixed Fourth-Quarter Results

First Solar's fourth-quarter performance showed mixed results. While adjusted earnings per share of $3.25 surpassed analysts' estimates of $3.14, the revenue of $1.16 billion fell short of expectations, which stood at $1.3 billion.

A Brighter Outlook for 2024

Despite the mixed results in the fourth quarter, analysts are optimistic about First Solar's path ahead in 2024.