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Baird strikes positive tone on First Solar, despite bearish peers

Arecent dip in First SolarInc.'s share price may present a buying opportunity for long-terminvestors who believe in the company's fundamentals, according to Robert W.Baird & Co. analysts, despite alternative analyst views on the company'sproject pipeline.

Whileinvestors reacted bearishly to a downgrade by Deutsche Bank, Baird instead moved tohighlight as much as $2.2 billion in estimated net cash available by year-end,funds from sales proceeds that could be recycled back into its global projectpipeline, particularly as foreign competitors face financial headwinds.

"GivenFSLR's strong balance sheet, international pipeline, and continued technologyadvancements, we believe the company is positioned for long-term growth andwould be aggressive buyers of shares at current levels," Baird analyst BenKallo said in a July 8 note.

Bairdheld its "outperform" rating, lowered the price target to $60 from$68, and moved its 2017 earnings-per-share estimate down to $2.51, compared tothe bearish $44 price target and $1.50 estimated EPS in 2017 posited byDeutsche Bank.

"FSLR'sfinancial position should increase confidence from customers that the companywill have the longevity to deliver on warranties and should also allow FSLR togarner more favorable financing rates on projects," Kallo said.

Bairddownplayed competing Chinese solar producers, suggesting that First Solar'slonger-term strategy to pursue joint-venture projects in unsubsidized marketstacks on additional upside, both in the U.S. and abroad.

Analystsat Credit Suisse on July 8 warned that U.S. projects could be delayed, sinceutilities might opt to hold off their procurements until after 2018, given thepresence of the federal investment tax credit through 2023. Additionally, aglobal glut of some 10,000 MW of solar modules could run up against estimateddemand of only about 6,000 MW in 2016.

"Wecurrently forecast $2.53/share in earnings power in 2017 compared to 2017consensus of $3.08, but with consensus declining 22% in the last 4months," Credit Suisse analyst Patrick Jobin said.

Butlike Baird, Goldman Sachs analysts expressed optimism in First Solar'soperational stability, holding their "buy" rating, and similarlyappealing to investors with consider a longer-term time horizon for growth.

"Wesee First Solar's unique position poised to deliver above average returns incoming years with a best in class balance sheet that provides additionalfirepower," Goldman analysts said.