First Solar Drops 16% on Revenues Miss & Muted Outlook

Shares of First Solar (NASDAQ: FSLR) were down over 16% during pre-market trading on March 3, after the American solar power systems and solar modules manufacturer reported mixed Q4 results.

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Though earnings topped estimates, revenues failed to meet expectations as the photovoltaic (PV) manufacturing industry continued to face supply chain, logistics, cost, as well as other pandemic-related challenges.

Investors were further disappointed by the muted FY2022 outlook issued by management, which was far lower to streets expectations.

Q4 Numbers

Positively, adjusted earnings of $1.23 per share almost trebled year-over-year, and beat analysts’ expectations of $1.06 per share. The company reported earnings of $0.42 per share for the prior-year period.

However, revenues jumped 55.5% year-over-year to $900 million but lagged consensus estimates of $917.69 million.

The company also stated that it is in advanced stage discussions to sell its project development and O&M platform in Japan. Further details of the potential transaction were not disclosed.

FY2022 Outlook

Looking ahead, management provided financial guidance for FY2022.

The company now forecasts adjusted earnings in the range of $0 to $0.60 per share, much lower than the consensus estimate pegged at $1.92 per share.

Further, net sales are forecast to be in the range of $2.4 billion to $2.6 billion, lower than the consensus estimate of $2.76 billion.

CEO Comments

First Solar CEO, Mark Widmar, commented, “We will continue to navigate near-term headwinds with a focus on the future, as we invest in realizing the full value of our differentiated thin-film technology,”

He further added, “This pivotal year will revolve around continued significant investment in R&D, new products, manufacturing expansion, and employing new contracting strategies, all of which we believe set the stage for sustained growth in 2023 and beyond.”

Analysts Recommendation

Consensus among analysts is a Hold based on 1 Buy, 10 Holds, and 2 Sells. At the time of writing, the average First Solar stock price projection of $90.60 implies 19.8% upside potential to current levels.

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