Avondale Partners Initiates Coverage on First Solar, Inc.(NASDAQ:FSLR) Here’s Why

On September 30, Equity Analyst Michael Morosi of Avondale Partners, LLC Initiated Coverage of First Solar, Inc.(NASDAQ:FSLR) with a $50 price target.

According to the report  “”We are constructive on the long-term competitiveness of the company’s low-cost thin film module technology underpinned by recent gains in efficiency relative to crystalline silicon modules. Improving profitability in the Components segment, however, will be offset by headwinds in the Systems business as relatively high margin ’12-’13 vintage projects are replaced by more competitively bid business. We believe EPS is likely to plateau around the current $3-3.50 level through 2018, implying risk to out-year consensus estimates. Considering the margin headwinds and with value creation stalled at its YieldCo JV with SunPower (SPWR, not rated), we view FSLR’s stock as fairly valued at current levels. Potential upside comes from incremental gross margin contribution from Module-plus sales, reduced capital markets pressure in the YieldCo sector, and long-term market share gains in the module business as efficiency improvements reaccelerate beyond ’16.

First Solar, Inc.(NASDAQ:FSLR) is a leading global provider of comprehensive photovoltaic (PV) solar systems which use its advanced module and system technology. The company’s integrated power plant solutions deliver an economically attractive alternative to fossil-fuel electricity generation today. From raw material sourcing through end-of-life module recycling, First Solar’s renewable energy systems protect and enhance the environment.

On September 30 FSLR announced that Mizuho Bank Ltd. was extending a low interest construction loan facility of up to US$33 Million (4 billion yen) in Japan to First Solar Japan GK to develop utility-scale solar power plants. The financing will be available for funding construction of qualified projects in First Solar’s development pipeline in Japan. First Solar will engage with Japanese companies to construct the projects.

The financing underlines First Solar’s strong commitment to the development of Japan’s PV utility-scale solar industry.

First Solar’s Regional Manager for Asia Pacific, Jack Curtis stated “The loan facility offering for PV utility-scale solar projects will further enhance Japan’s ongoing efforts to reduce its dependency on imported fossil fuels. Mizuho Bank Ltd.’s support for First Solar’s project development is expected to encourage further participation with more private investments in the PV utility-scale solar sector in Japan.”

$50 Price target: according to the report ”We base our $50 price target on a sum of the parts analysis. We apply a 12x P/E multiple to FSLR’s forward three-year average EPS of $3.27 to reach $39/share value for the core business and add $3/share in value for CAFD based on our $15 price target and $8/share in net cash.”

solar energy result in more cost and risk for plant owners. In addition to margin stacking, bankability issues and lack of integration between companies, there are significant long-term reliability risks with disjointed models. Our streamlined approach integrates technologies and expertise across the solar value chain, delivering more reliable, dependable and cost-effective solutions for our customers.FSLR believes that clean affordable solar electricity is an essential part of the worldwide energy mix. Our proven energy solutions have diversified the energy portfolio and reduced the risk of fuel-price volatility, while delivering an LCOE that is cost competitive with fossil fuels.

First Solar has developed, financed, engineered, constructed and currently operates many of the world’s largest grid-connected PV power plants in existence. By integrating technologies, services and expertise across the entire solar value chain, First Solar delivers bankable PV energy solutions that enable a world powered by reliable and affordable solar electricity.


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