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First Solar: Undervalued Prior To 2019 Financial Guidance?

Dec. 03, 2018 2:06 AM ETFirst Solar, Inc. (FSLR)JKS28 Comments
Morningsidepark profile picture


  • FSLR announced that it will present its 2019 Financial Forecast on December 11.
  • FSLR has bounced from a 52 week low of $36.51 in late October but is struggling to breakthrough a descending 50 day Moving Average in the run up to December11th.
  • Solar module pricing has declined during 2018 due to the impact of US Section 201 Tariffs and a policy change in China and the perception of weakening worldwide demand growth.
  • Stocks in the sector have been hammered. FSLR, however, has important differentiating product and financial characteristics, particularly its back log of sales for 2019 and 2020 and balance sheet cash.
  • 2019 projections are likely to show the completion of its Series 6 rollout and very solid cash flow generation sufficient to cover the Series 6 buildout.

First Solar, Inc. (NASDAQ:FSLR) announced it will present its 2019 Financial Forecasts on December 11th, 2018. FSLR hit a 52 week low of $36.51 in late October and has traded between $44 and $45 recently. It is struggling, however, to break through a descending 50 Day Moving Average trend line that will continue to decline through December 11th. The 2019 Financial Forecast release on December 11th could be a timely catalyst to break this downward trend and at least put a bottom underneath the stock (barring a general market selloff due to the impending S&P death cross).

Solar stocks in general have had a poor 2H 2018 with some of the solar manufacturers, such as Jinko Solar (JKS), trading down 30% to 50% prior to a recent rally driven by solid JKS Q3 results on November 26th. The selloff in solar manufacturer stock prices was driven by a steep drop in module prices due to the perception that US Section 201 tariffs on the importation of crystalline silicon photovoltaic ("CSPV") cells and modules would reduce demand in the U.S. during 2018 and 2019 (and perhaps beyond) and to the major change in government policy by China in a May 31st announcement that was anticipated to push the global growth rate (ex the U.S.) in solar installations downwards.

ChartFSLR data by YCharts

The downturn in FSLR's 50 day moving average began with the market's reaction to its Q3 earnings and the full year 2019 forecast released on October 25th (here is the 10Q). At the December 11th release of 2019 Financial Forecasts, 32 trading days will have passed since the Q3 earnings price decline. The descending 50 dma will be within 10 days of flattening and any positive news could act as a catalyst to put in a bottom and

This article was written by

Morningsidepark profile picture
Investment Banker, Entrepreneur, and Investor

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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