(Bloomberg) — First Solar Inc. tumbled the most since
November after RBC Capital Markets LLC said the producer of
solar energy systems won’t meet its own revenue and profit
targets for 2016.
First Solar’s revenue will barely grow this year and next,
RBC analyst Mahesh Sanganeria said, compared with the company’s
estimates for an increase of 19 percent in 2015 and 2.5 percent
in 2016. RBC cut its rating on shares of the Tempe, Arizona-based company to the equivalent of sell from hold, and dropped
its 12-month price target to $34 from $54. First Solar plunged
7.3 percent to $51.06 at 4 p.m. in New York, the steepest drop
in the Standard & Poor’s 500 Index.
The biggest U.S. producer of solar modules may lose its
cost advantage over makers of more efficient panels, hampering
its ability to win orders for large-scale power plants,
Sanganeria said in a note to clients Tuesday. First Solar could
counter that by boosting sales to third parties, but would have
to cut selling prices and erode profit margins, he wrote.
“The company’s high exposure to utility scale projects and
the long lead-time and development cycle of those projects”
will make it difficult for First Solar to meet its revenue
forecast, Sanganeria wrote.
First Solar reported on April 30 its first quarterly loss
in three years, as revenue tumbled amid plans to form a joint
venture with SunPower Corp. that will own and operate power
plants. The move delays the recognition of revenue from the sale
of the projects.
Steve Krum, director of corporate communications for First
Solar, declined to comment.
First Solar has become a leader in building solar power
plants because its panels are cheaper to produce than
crystalline-silicon modules, which are more efficient at
converting sunlight into electricity.
That cost advantage has diminished in recent years, and RBC
estimates the better-performing silicon modules will only cost 2
cents more per watt than First Solar’s by the end of this year.
“First Solar may lose its cost advantage for the whole
system compared to competitors using multicrystalline silicon
technology,” Sanganeria wrote.
To contact the reporter on this story:
Callie Bost in New York at
cbost2@bloomberg.net
To contact the editors responsible for this story:
Jeff Sutherland at
jsutherlan13@bloomberg.net
Jeremy Herron