North Coast Solar Stocks

April 29, 2009

First Solar Heats Up Otherwise Cool Field With Its Sizzling Q1

Filed under: AKNS, FSLR, SPWR, STP — Tags: , , , , , , — Jason @ 6:57 pm

Wednesday April 29, 2009, 6:57 pm EDT

Investors pushed up solar stocks Wednesday in the face of mostly bad first-quarter news but ahead of a strong report after the closing bell from First Solar (FSLR).

The company said revenue more than doubled from the year-ago quarter to $418.2 million, beating analysts’ consensus estimate of $403.4 million. Earnings soared to $1.99 per share from 57 cents, shattering analyst views of $1.50.

“We’re particularly pleased we were able to sign up 479 megawatts of new volumes in Q1, particularly under the conditions the industry’s been dealing with,” First Solar CEO Mike Ahearn said on an earnings conference call late Wednesday.

“We’ve got to be focused on executing our cost-reduction road map,” he said, anticipating it could widen its price advantage.

The company also said it’s started looking for a new CEO, after which Ahearn would continue to serve in the full-time position of executive chairman.

First Solar rose about 14% after hours. The stock lifted 3.4% in regular trading, while Suntech Power Holdings (STP) vaulted more than 16% and SunPower (SPWRA, SPWRB) more than 10%.

The sector’s rise Wednesday was “insanity,” said Kaufman Bros. analyst Theo O’Neill. “It’s got to be massive short covering … or investors are looking into next year.”

Early Wednesday, Norway’s Renewable Energy issued results O’Neill called “disastrous.” German Conergy rose on foreign bourses after its earnings report, but O’Neill says its CEO described an “almost two-thirds overcapacity for solar” and said prices could “drop by as much as 50% this year.”

Smaller U.S. solar outfit Akeena Solar (AKNS) on Wednesday reported a loss and sales that missed views, and gave a sales outlook for the current quarter far below views.

Oversupply plagues the industry. Harsh winter weather has curbed rooftop installations. And the world financial crisis makes solar project funding hard to come by, says Pacific Crest analyst Mark Bachman.

“The tide has been kind of going against the solar industry,” he said. “By the time 2009 is all said and done, we should see (silicon wafer) pricing down about 25%.”

Bachman says 2010-11 looks better. He expects government spurs abroad and in the U.S. — such as a 30% tax credit and the prospect of clean-energy mandates — to tempt large-scale installations.

He calls First Solar “an outlier to the industry — to the good side” and its Q1 report “absolutely stellar.”

First Solar uses a proprietary thin-film solar module, not crystalline silicon, with an industry-low cost per kilowatt hour. That dropped to 93 cents, down from 98 cents a quarter ago. Bachman expects 78 cents by the fourth quarter.

“The cost to manufacture is coming down extremely fast” — faster than price cuts, Bachman said. He says First Solar could trim prices 10% and “still maintain a significant price gap” with other firms.

Installer Akeena saw interest in residential solar from the new 30% tax credit, but a “more acute” slowdown on the commercial side, CEO Barry Cinnamon said on Wednesday’s earnings call. Its commercial sales fell to $915,000 from $7 million in the year-earlier quarter.

It’s taking time for the U.S. government to put in place the means to process commercial applications for the credit and other perks, he says. So Cinnamon sees the late third quarter as the earliest time a pickup in related installations would begin.

He was sanguine on price cuts. “We welcome the solar industry’s return to a declining panel-price environment,” Cinnamon said. “It’s great for our customers.”

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