Wed, Feb. 25, 9:34 AM
- BofA/Merrill and Northland Securities have upgraded First Solar (NASDAQ:FSLR) to neutral ratings after the company provided mixed Q4 results and light Q1 guidance in the wake of its YieldCo announcement. Needham and RBC have hiked their targets.
- Northland's Colin Rusch: "With FSLR’s announcement of its intention to list a yield co, we are moving to the sidelines for now until further details are available on the yield co." His $51 target (upped from $46) assumes the YieldCo will be worth $6B, sport a 3.5% dividend yield, and have cash available for distribution (CAFD) of $0.08/watt, with First Solar deploying 3GW into it by the end of 2017.
- Needham's Edwin Mok (target hiked by $5 to $75): "With the announced negotiations between FSLR and SPWR to form a joint yieldco, we are not surprised by the lowered 1Q15 guidance ... we believe management is executing its prior plans on project pipeline development, increasing efficiency and capacity expansions. The yieldco strategy coupled with FSLR's strong market position and a well capitalized balance sheet should enable FSLR to extract significant value from the joint yieldco."
- Prior First Solar coverage
Tue, Feb. 24, 5:57 PM
- Along with mixed Q4 results, First Solar (NASDAQ:FSLR) has guided for Q1 revenue of $550M-$650M and EPS of -$0.25 to -$0.35, below a consensus of $933M and $0.84. The company blames "the completion of the Desert Sunlight and Topaz projects and the retention of projects on balance sheet in relation to the announced plan to pursue a joint YieldCo vehicle with SunPower."
- 509MW of solar modules were produced in Q4, +13% Q/Q and +15% Y/Y. Conversion efficiency (fleet average) rose to 14.4% from 14.2% and 13.4%, and capacity utilization to 84% from 77% and 83%.
- Potential project bookings opportunities are down by 200MW Q/Q to 13.5GW, and expected future systems/3rd-party module revenue up by $100M to $7.5B. However, expected module shipments are up by a healthy 700MW to 4GW.
- Gross margin rose 930 bps Q/Q and 600 bps Y/Y to 30.6%. R&D spend fell 9% Y/Y to $35M, and SG&A 8% to $71M. First Solar ended 2014 with $1.99B in cash/investments, and just $217M in long-term debt.
- Shares are down just fractionally AH, as investors keep focusing on the YieldCo. They rose 10.2% in regular trading.
- Q4 results, PR, earnings slides (.pdf)
- YieldCo coverage: I, II
Tue, Feb. 24, 4:07 PM
Tue, Feb. 24, 1:16 PM
- SunPower (NASDAQ:SPWR) states in its Q4 earnings slides (.pdf) its planned solar project YieldCo with First Solar (NASDAQ:FSLR) will be a 50/50 JV, and promises it will lower the companies' cost of capital and improve their financing options for solar projects.
- Meanwhile, Deutsche's Vishal Shah (a long-time solar bull) has upgraded First Solar to Buy ahead of this afternoon's Q4 report, and declares the YieldCo could be "one of the best growth stories out there."
- Under "conservative assumptions," he sees SunPower and First Solar respectively having 640MW and 755MW of projects they can contribute, resulting in an equity value of $2.8B. Assuming an 85% payout ratio, Shah sees the YieldCo providing a 5% dividend yield. He adds the companies could each contribute another ~1.5GW of projects (via their pipelines) by the end of 2016.
- Raymond James' Pavel Molchanov compares the alliance to a Duke/UNC or Coke/Pepsi partnership. "By joining forces, First Solar and SunPower can create an asset base that is even larger ... With the S-1 set to be filed in 1Q, we see no reason why the IPO couldn’t take place in 2015."
- The YieldCo news is easily overshadowing SunPower's light Q1 guidance: Revenue of $410M-$460M and EPS of $0.05-$0.15 vs. a consensus of $544.7M and $0.25. Though the company says its "business fundamentals for 2015 remain strong," it's withdrawing its full-year guidance until YieldCo plans are finalized.
- SunPower recognized revenue on 293MW of solar systems in Q4, a little below guidance of 300MW-340MW. It expects to recognize 240MW-270MW in seasonally weak Q1. Q4 gross margin was 20.4%, +370 bps Q/Q and flat Y/Y. Q1 GM guidance is at 18%-20%.
Tue, Feb. 24, 12:45 PM
Tue, Feb. 24, 9:16 AM
Mon, Feb. 23, 5:37 PM
Mon, Feb. 23, 5:35 PM
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Mon, Feb. 23, 4:41 PM
- First Solar (NASDAQ:FSLR) and SunPower (NASDAQ:SPWR) "are in advanced negotiations to form a joint YieldCo vehicle (the YieldCo) to which they each expect to contribute a portfolio of selected solar generation assets from their existing portfolio of assets."
- After reaching a deal, the companies plan to do an IPO for the YieldCo. Investors in both companies have been urging them to follow SunEdison's lead in launching solar project YieldCos; each had been non-committal until now.
- FSLR +9.7% AH to $54.44. SPWR +11.5% to $31.00. SunPower's Q4 report arrives tomorrow morning; First Solar reports after tomorrow's close.
Tue, Feb. 10, 4:11 PM
- Tim Cook (NASDAQ:AAPL) states during a Goldman conference talk Apple is partnering with First Solar (NASDAQ:FSLR) on an $850M California solar farm. Apple is a week removed from announcing plans to invest $2B to build a Mesa, AZ global "command center" for its data center infrastructure that will run on renewable energy. (live blog, webcast)
- Cook also states the Apple Pay rollout is "going faster than I thought it would, much faster." Apple has provided few details thus far about total Apple Pay transaction volumes.
- He asserts once more Apple Watch (set to ship in April) will be a game-changing product, as debate continues to swirl about the size of its market opportunity. "The customizable nature of the Apple Watch is incredible."
- Apple closed up 1.9%, making new highs and becoming the first U.S. company to post a $700B+ market cap along the way. First Solar closed up 4.8%, spiking in the final minutes of trading thanks to Cook's disclosure.
- Update: First Solar has issued a PR about the solar project. It's located in Monterey County, and is expected to be finished by the end of 2016 after starting construction in mid-2015. Apple will receive 130MW of electricity through a 25-year power purchase agreement, and PG&E the other 150MW.
Tue, Feb. 3, 10:59 AM
- Solar stocks are adding to yesterday's gains in a big way (TAN +3.6%) as oil prices (and oil/gas stocks) continue their recent rally: WTI crude is up $1.51 today to $51.08/barrel. The Nasdaq is close to breakeven.
- Also possibly helping solar firms: Canadian Solar's (CSIQ +21.2%) $265M deal to buy North American solar project developer Recurrent Energy from Sharp. The deal, which CSIQ estimates spells a $2.3B+ revenue opportunity, acts as a fresh vote of confidence for the downstream U.S. solar market in the wake of oil and natural gas' big declines.
- Notable gainers (besides CSIQ): FSLR +4%. SPWR +5.1%. JKS +8%. JASO +6.5%. SOL +7.1%. VSLR +6.3%. ASTI +7.7%. CSUN +7.7%. YGE +4.7%. HSOL +8.8%. DQ +3.4%. ENPH +5.8%. TSL +5.5%.
Mon, Feb. 2, 11:30 AM
- WTI crude oil soared above $48/barrel on Friday after ISIS attacked the Iraqi city of Kirkuk, and is holding its ground today. Oil/gas producers are rallying, and so are beaten-down solar firms (TAN +2.2%).
- Notable gainers: FSLR +6%. SCTY +9.2%. SUNE +5.5%. SPWR +4.9%. TSL +6.6%. JKS +4.8%. CSIQ +4.6%. DQ +13.2%. VSLR +4.4%. JASO +3.8%. ENPH +3.4%. HSOL +3.6%. YGE +4.3%. ASTI +3.1%. SOL +3.4%.
- RBC made a contrarian call on Friday, upgrading SunPower, JA Solar, and Trina to Outperform. A long list of U.S. and Chinese solar firms are expected to post Q4 results this month.
Mon, Jan. 26, 2:09 PM
- Though WTI crude is still below $46/barrel and the Nasdaq is only up 0.3%, beaten-down solar stocks are posting big gains (TAN +3.9%). Quite possibly helping: Pres. Obama has said the U.S. will help finance an Indian effort to install 100GW of solar capacity by 2022.
- The head of an Indian think tank estimates such an effort would cost $160B. India says it's seeking $100B worth of investments over 7 years. The country's bureaucracy/red tape has often stalled major foreign investments; the new government has repeatedly promised to change that.
- First Solar (FSLR +4.1%) and SunEdison (SUNE +4.1%) are among the companies to have struck deals for Indian solar projects. SunEdison has announced plans to invest up to $4B in an Indian solar manufacturing plant through a JV. First Solar and Trina (TSL +5.4%) are weighing plans to build their own local plants.
- Other notable gainers: SCTY +4.7%. JKS +7.5%. SOL +5.8%. SPWR +2.9%. CSIQ +4.6%. JASO +4.4%. RGSE +3.7%. ASTI +9.3%. HSOL +3.2%. DQ +3.7%.
Fri, Jan. 16, 2:44 PM
- South Jersey Industries (NYSE:SJI) boasts the most upside of any gas and electric utility stock, Brean Capital analysts say, believing many aspects of SJI’s operations - including its roles in the PennEast pipeline project, CNG refueling stations, liquefaction operations and its solar investment are not fully priced into the stock.
- Among water utilities, Brean sees improving fundamentals at American Water Works (NYSE:AWK) while noting that the stock is undervalued compared to its closest peer, Aqua America.
- In flow technology, Brean believes Xylem (NYSE:XYL) will continue to use its free cash flow to make strategic water technology acquisitions that will contribute to strong future growth.
- In clean energy, the firm thinks First Solar (NASDAQ:FSLR) is well positioned for long-term growth but its stock is extremely undervalued at current levels.
Thu, Jan. 8, 1:15 PM
- Deutsche's Vishal Shah, bullish on solar for a long time, asserts the "recent volatility in solar stocks, driven largely by oil price weakness, presents an attractive entry point for investors as we expect 2015 to be a year of stable industry pricing and accelerating volume growth."
- Shah expects solar to see a "balanced supply/demand outlook as strong demand from the US and improving demand from China/other emerging solar markets offsets any potential demand weakness in the UK/Japan."
- He observes oil accounts for just ~5% of global electricity output, and sees both solar project pipelines/margins and module margins rising in 2015. Tariffs against Chinese module vendors are expected to be "completely removed."
- His top picks are SolarCity (SCTY +3.3%), SunEdison (SUNE +4.1%), SunPower (SPWR +6.1%), and Vivint (VSLR +0.3%); the first three are faring quite well today. Yingli (YGE +0.2%), however, has been downgraded to Hold due to balance sheet and financial flexibility concerns.
- Other major gainers: FSLR +3.9%. JKS +6%. ENPH +5.4%. CSIQ +3.7%. RGSE +5.2%. TERP +3.2%.
- SunEdison announced today it has bought new wind turbines that will allow it to build up to 1.6GW of wind projects that qualify for U.S. tax credits. The purchase follows the company's $2.4B deal to buy project developer First Wind.
- ETFs: TAN, KWT
Wed, Jan. 7, 9:19 AM| 1 Comment
FSLR vs. ETF Alternatives
First Solar Inc is a provider of solar energy solutions. It designs, manufactures and sells PV solar modules with a thin-film semiconductor technology. It also manufactures crystalline silicon solar modules.
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