First Solar Stock Sinks After Price Target Cut by Jefferies

10 oct.

First Solar (NASDAQ: FSLR), one of the top solar energy companies, took a significant hit on Thursday, with its stock plummeting nearly 10%. This sharp decline came after Jefferies, a prominent investment bank, lowered its price target for the company from $271 to $266, citing potential delays that could negatively impact the current quarter's earnings. The report, while maintaining a “buy” rating, has raised concerns about First Solar’s short-term profitability and execution amidst industry-wide challenges.

Why Did FSLR Drop?
Jefferies’ revised forecast signals caution about First Solar’s ability to meet earnings expectations in the coming quarter. The analysts specifically pointed out potential delays in product volumes, which may lead to lower-than-anticipated earnings. They attributed this to several key factors:

1. Interconnection and Supply-Chain Issues: Utility-scale solar growth continues to face delays due to long interconnection queues, labor shortages, and supply-chain disruptions. These bottlenecks, already a persistent challenge in 2023, are expected to stretch into next year, pushing some projects from weeks to months.

2. Module Pricing Concerns: Uncertainty around module pricing due to anti-dumping and countervailing duty (AD/CVD) determinations could also have a negative impact. Additionally, the idea of selling excess capacity from India into the U.S. market raises questions about demand and profitability in the near term.

3. Broader Market Impact: Jefferies' report not only affected First Solar, but also sent ripples across the entire solar sector. Shares of other solar power giants like Enphase Energy (ENPH) and SolarEdge Technologies (SEDG) also saw declines of 6% and 5%, respectively. This points to broader concerns within the solar industry about growth rates and earnings amid macroeconomic headwinds.

Jefferies Still Bullish Long Term
Despite these challenges, Jefferies’ analysts remain optimistic about First Solar's long-term outlook. Their “buy” rating underscores confidence in the company’s ability to navigate these short-term obstacles and maintain its position as a market leader in solar energy. First Solar's focus on innovation, advanced technology, and strong demand for renewable energy should support its recovery once current delays are addressed.

Technical Outlook: Bearish Signs Ahead
The technical picture for First Solar (NASDAQ: FSLR) looks bleak in the short term. As of Thursday, the stock is down 9.29% and trading with a weak Relative Strength Index (RSI) of 32, indicating oversold conditions. Additionally, the daily price chart shows a bearish gap down pattern—a strong indication of continued downward momentum.

Further accentuating the bearish thesis is the stock’s position relative to key moving averages. First Solar (NASDAQ: FSLR) is currently trading below both its 50-day and 200-day moving averages, signaling potential downside risk. This aligns with the broader market sentiment, where traders have become cautious, awaiting more clarity on earnings and supply chain issues.

What to Expect Next for First Solar?
While the near-term outlook for First Solar (NASDAQ: FSLR) looks challenging, the company’s fundamentals remain solid for long-term investors. If the delays are resolved, First Solar could regain its footing.

In conclusion, while First Solar faces some serious short-term challenges, the long-term growth story in renewable energy remains intact. Investors should keep a close eye on the company’s performance in the coming months to gauge whether this recent decline is a buying opportunity or a sign of deeper trouble ahead.