Credit Suisse Doubles Down On Bearish Stance Before First Solar's Q1 Print: 'Major Catalysts Are Behind Us'

First Solar, Inc. FSLR shares have gained 10 percent quarter-to-date, and despite expecting in-line first-quarter results, Credit Suisse is bearish on the solar manufacturer.

The Analyst

Analyst Michael Weinstein reiterated an Underperform on First Solar with a $57 price target.

The Thesis

First Solar, which is scheduled to report Q1 results after the close April 26, is likely to report in-line results "barring lumpy projects," Weinstein said in a Tuesday note.

"We reiterate our Underperform rating as we believe major catalysts are behind us," the analyst said.

Key items to watch in the quarter are bookings activity, capacity additions, clarity on module costs under segmentation and the rollout of the S6 photovoltaic module, he said.

Credit Suisse forecast revenue of $511 million and an earnings loss of 7 cents per share, with the estimates including $172 million in module sales and $339 million in systems sales. The analyst estimates that module gross margin will expand from 14 percent in 2017 to 16.3 percent, thanks to tariff-driven higher ASPs in the U.S.

"System sales are second-half heavy as management plans to benefit from lower-cost Series 6 production," Weinstein said.

On bookings, Credit Suisse said it expects minimal incremental bookings in Q1 at prior rates.

To reflect higher system sales in 2018 on the basis of an updated completion schedule for backlogged projects, Credit Suisse increased its 2018 earnings per share estimate from $1.76 to $1.82. To account for lower price bookings after Q4, Credit Suisse adjusted its module ASPs and gross margin, which lowered its 2019 and 2020 earnings per share estimates.