Tag Archives: itc

First Solar R&D ‘Paying Off,’ But Sales Remain ‘Uneven’: Argus

First Solar ‘s ( FSLR ) quarterly $31.5 million R&D spending average is starting to pay off, Argus analyst David Coleman said Wednesday, noting the No. 1 solar installer’s technology is becoming cost-competitive even without subsidies. Coleman rates First Solar stock a buy, but he slashed his price target to 66 from 90. Shares have pulled back 33% since hitting a 2016 high on March 18, as earnings last month missed Wall Street expectations. Over the past three months, First Solar stock has fallen 23.1% vs. a 6.8% gain in the S&P 500. But midday on the stock market today , First Solar stock was up nearly 2%, near 50. Shares of top rival SunPower ( SPWR ) were up a fraction, trailing IBD’s 20-company Energy-Solar industry group, which was higher by close to 2%, above 27, after touching a three-year low of 25.86 on May 10. The group ranks just No. 180 out of 197 groups tracked by IBD. First Solar stock was slammed on the company’s $100 million Q1 sales miss last month. Then, the firm announced CFO Mark Widmar would succeed CEO James Hughes, effective July 1. Hughes will join the board. But that sales miss was largely due to the timing of project revenue recognition, Coleman wrote in his research report. Predicting quarterly sales for developers like First Solar and SunPower can be tricky. This month, SunPower’s Q2 sales view lagged by $400 million. “Overall, we remain optimistic about the company’s long-term earnings power; however, investors should expect First Solar’s financial results to be uneven on a quarter-to-quarter and year-to-year basis due to the timing of revenue recognition,” he wrote. First Solar Rides Cadmium Telluride R&D During Q1, cash declined 3.5% sequentially to $1.1 billion, but First Solar remains profitable “even as its peers have been hurt by oversupplied markets and a lack of pricing power,” Coleman wrote. It investments in cadmium telluride technology are starting to pay off. “We see evidence that First Solar’s technological investments are paying off, as they have enabled the company to lower the cost of solar generation on a per-watt basis and to expand its opportunity set of utility-scale projects,” he wrote. Cadmium telluride should provide a cost advantage vs. more commoditized solar module technology such as polysilicon, Coleman wrote. In some markets, it’s becoming cost-competitive even without subsidies — a tough goal for solar companies still largely dependent on governmental whims. By 2025, First Solar expects to have 40 gigawatts in North American utility installations, implying 21.9% growth. The company also has bookings in Turkey, Japan, Australia, India and Africa, Coleman wrote. First Solar should also benefit from stricter environmental regulations on fossil-fuel-based power, and from increased government and public support for solar. Last year, the U.S. Congress extended the Investment Tax Credit (ITC) on solar by five years, avoiding a cliff in 2017 installations. The biggest risk lies in First Solar’s dependence on utility-scale deployments, Coleman wrote. “If the market for utility-scale solar power generation does not expand significantly over the next few years due to cost factors or technological or political developments, First Solar would likely experience slower-than-anticipated growth,” he said.

Tesla ‘Cousin’ SolarCity Trims 2016 View On Nevada, ITC Effect

Nevada’s net-metering decision torched Tesla Motors ( TSLA ) “cousin” SolarCity ( SCTY ) late Monday, after the No. 1 residential solar installer cut 2016 installation guidance and reported a 150-megawatt dip in expected Q1 bookings. SolarCity also reported a wider-than-expected Q1 loss and was in the red, minus items, for the 13th consecutive quarter. Revenue, however, topped the expectations of 18 analysts polled by Thomson Reuters, and SolarCity beat its own installation forecast. In after-hours trading following the earnings release, SolarCity stock crashed more than 15%, after rising 3.1% in Monday’s regular session, at 22.51. As of Monday’s close, shares are down 56% this year. For Q1, SolarCity reported $123 million in sales, up 82% vs. the year-earlier quarter, and smashing Wall Street expectations for $108.4 million. But losses per-share minus items deepened to $2.56 vs. consensus views for $2.31. Last year, SolarCity pledged to curb its annual 80% growth rate in order to turn around profits. During Q1, SolarCity installed 214 megawatts, up 40% year over year and beating its own guidance for 180 MW. For Q2, SolarCity expects 185 MW in installations, which would be down 2% vs. Q2 2015. SolarCity also guided to $2.70-$2.80 losses per share ex items, widening from $1.61 in the year-earlier quarter and missing the consensus for $2.13. For the year, SolarCity now expects 1 gigawatt to 1.1 GW in installations vs. earlier views for 1.25 GW, noting that Q1 bookings were about 150 MW lower than anticipated and are unlikely to be made this year. SolarCity said Nevada averaged about for 20 MW in quarterly installations. The company exited the state in December after Nevada regulators opted to cut net-metering payments to solar customers, which makes the economics of installing solar energy systems less attractive to users. Top rival Sunrun ( RUN ) also exited Nevada. Spooked by Nevada’s move, some potential customers have backed off booking solar installations, SolarCity said Monday. And the extension of the U.S. Investment Tax Credit (ITC), a key solar subsidy, beyond what had been a 2016 deadline — good in the long run — removed the urgency to get projects done right away. “Pending regulatory decisions in California, Massachusetts and New Hampshire (which have since been largely resolved) further delayed solar purchasing decisions,” SolarCity wrote in its earnings release. Tesla CEO Elon Musk is chairman of SolarCity, whose CEO is his cousin, Lyndon Rive. The two companies have a battery-technology partnership.

First Solar, SunPower To Withstand SunEdison Inferno: Guggenheim

First Solar ( FSLR ) and SunPower ( SPWR ) stocks flashed Wednesday after a Guggenheim analyst said rival  SunEdison ‘s ( SUNE ) “collapse” wouldn’t torch the duo and their yieldco 8point3 Energy Partners ( CAFD ). Just ahead of the closing bell on the stock market today , SunPower stock was up about 3%, leading First Solar stock which was up about 2%. Shares of 8point3 Energy Partners trailed, up 0.5%, ahead of beleaguered SunEdison stock, down about 7% and trading below 40 cents. Broadly, solar stocks lit up Wednesday. IBD’s 21-company Energy-Solar industry group was up 2% in late-afternoon trading. SunEdison stock has plunged 99% since its 2015 high on July 20, when it announced its plan to acquire Vivint Solar. Residential installer Vivint Solar scrapped the sale in December, citing SunEd’s lagging financials. Last month, SunEdison’s yieldco TerraForm Global ( GLBL ) distanced itself from massive project developer SunEd, which could be headed for a bankruptcy protection filing soon , according to reports. SunEdison may be in technical default on $725 million in second-tier loans unless it negotiated extensions with creditors. ITC Extension A Boon But First Solar and SunPower won’t feel that heat, Guggenheim analyst Sophie Karp wrote in a research report. Karp initiated coverage on First Solar stock with a buy rating, ahead of SunPower and 8point3 Energy Partners stocks, which have neutral ratings. Congress’ extension to the key Investment Tax Credit (ITC), which underpins the U.S. solar industry, will prove a boon for large-scale developers like First Solar and SunPower, she wrote. Residential installers like SolarCity ( SCTY ) and Sunrun ( RUN ) won’t see the same benefits. “We do not think that residential developers will be main beneficiaries due to the fiercely competitive nature of their business,” she wrote. “Despite operating in a fragmented and competitive market (large-scale developers) are still much better protected and will be able to retain more benefits.” But SunPower might be too internationally stretched to reap the ITC extension benefits as fully as First Solar, Karp wrote. Prepping for the expected expiration Dec. 31, 2016, SunPower invested heavily in international expansion. “Given that the ITC extension has changed the calculus domestically, we wonder if SunPower is now too thinly stretched to take advantage of this backdrop,” Karp wrote. Her price target on SunPower stock is a 21. She lists First Solar stock with a 77 price target. SunEdison’s collapse will likely lead First Solar and SunPower to bring their financing back to basics, Karp wrote. Project financing will be available to reputable players at attractive rates, but yieldcos will likely continue to be shut out of the market. Meanwhile, tech innovations are driving solar costs down and storage is on the horizon, Karp wrote. Storage is often seen as a pie-in-the-sky innovation to cut solar customers’ reliance on utilities at night and on cloudy days.