First Solar fundamentals to come under increased pressure in 2023 - GLJ research

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By Sam Boughedda 

GLJ Research analysts double downgraded First Solar (NASDAQ:FSLR) from Buy to Sell in a research note Tuesday, with a price target of $46.80, stating it is "priced for perfection."

Commenting on the company's most recent results, the analysts said FSLR's most recent quarter was "nothing short of a disaster across the board."

"So why has FSLR been among the best performing solar stocks of 2022, currently trading at 85.4x the Consensus 2022E EBITDA est. of $189.2M (meaning, investors believe FSLR will pay them 100% of its 2022E EBITDA as a dividend for the next 85yrs, despite the fact the company's FCF has been negative for four consecutive quarters in what has been among the best solar module pricing environments since 2011 - i.e., due to the surge in poly-Si prices seen in 2021-22, which we feel is in the process of reversing)?" questioned Johnson. "In short, 2022 has been a year defined by 'euphoric tall tale optimism,' like the passage of Biden's 'Build Back Better' bill, which extended the 30% ITC indefinitely, as well as every decision (i.e., NEM 3.0 + Biden allowing Chinese imports in despite allegations of circumventing tariffs + the War in the Ukraine + etc.) on any government policy being deemed by the sell-side a 'huge positive'."

The analysts added that despite First Solar's pre-tax profit entering the year at $167.2 million, declining to -$61.7M in 3Q22, the stock is up +91.8% year-to-date, largely on hype and a very bullish sell-side.

However, he stated that with 2023E being a year where FSLR will have to show and prove, the firm expects the company's fundamentals to come under increased pressure through 2023E.