First Solar’s shine fades on competition fears
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First Solar was the biggest decliner on the S&P 500 on Thursday after analysts at Deutsche Bank downgraded the solar-panel maker, noting that increased competition is weighing on prices.
Analysts at Deutsche Bank downgraded the company to “hold” from “buy” and lowered their price target to $44 from $80, sending shares in the Arizona-based company 9.8 per cent lower to $44.34 and taking its year-to-date decline to 33 per cent.
The analysts also lowered their earnings per share forecasts for the company and now see earnings of $1.50 per share in 2017, below consensus forecasts for $3.18.
For 2018, they project earnings of $2.50 a share compared with a consensus of $3.98.
A slower than expected ramp-up in bookings, a pause in demand for First Solar products ahead of its new Series 5 module, and pricing pressure “driven by aggressive bidding environment from the developers in international segments” were cited as reasons for the downgrade, according to Vishal Shah, Deutsche Bank analyst.
“Even though First Solar remains one of the best-run companies in our coverage, we believe it would be difficult for management to grow earnings amid some of the expected near-term headwinds,” Mr Shah said.
The sell-off in First Solar shares arrived on a day when US stocks fluctuated between gains and losses.
At the close, the S&P 500 was little changed at 2,097.9 while the Dow Jones Industrial Average slipped 0.1 per cent to 17,895.9. The Nasdaq Composite rose 0.4 per cent to 4,876.8.
Elsewhere, shares in WhiteWave Foods jumped 18.7 per cent to $56.28 after Danone, the world’s biggest yoghurt maker, agreed to buy the company.
Danone will pay shareholders in the Colorado-based company $56.25 per share in cash, which values the company at about $12.5bn including debt.
Meanwhile, shares in Western Digital rallied after the maker of hard drives named a new chief financial officer and raised its guidance for the fiscal fourth quarter late on Wednesday.
The California-based company said Mark Long would succeed Olivier Leonetti as chief financial officer in September.
Moreover, the company said it expected to earn 72 cents a share in the quarter ended in July, compared with its previous estimate for a range of 65 to 70 cents a share. That also topped analysts’ estimates for earnings of 67 cents a share.
Western Digital said it expected sales of $3.46bn for the quarter, ahead of expectations for $3.41bn.
Its shares rose 4.6 per cent to $47.57.
“We suspect that the beat was driven by better NAND pricing trends as well as better-than-feared PC market demand,” Rod Hall, an analyst at JPMorgan said.
The positive commentary on NAND memory chips also buoyed shares in other chipmakers.
Seagate Technology shares rose 0.9 per cent to $23.73. Micron Technology shares rose 4 per cent to $12.20 — the company also announced the release of its latest NAND flash chip for the so-called Internet of things.
Twitter: @mamtabadkar
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