First Solar Is The One To Own In A Challenging Environment

Shares of First Solar, Inc. FSLR tumbled more than 7 percent on Wednesday after the company's earnings report suggested the solar energy company and the overall solar market will see further gloom ahead as evidenced by its poor guidance.

In a research report following First Solar's earnings, Ben Kallo of Baird argued that if investors insist on exposure to the solar market then First Solar is "the one to own" in the current environment.

First, Kallo did note First Solar's earnings report was highlighted by a top- and bottom-line beat and the fact that the company's products are commanding a premium price in select markets. As such, the company's outlook as a cost and technology leader remain unchanged.

Kallo also highlighted the fact that First Solar has already booked approximately 0.5 GW worth of projects since the start of 2017 and also has around 2.2 GW of mid- to late-stage opportunities ahead. This gives the analyst confidence that the company is well positioned to record bookings throughout the year.

Guidance Review

First Solar boosted its revenue guidance for the full year to a range of $2.8 billion to $2.9 billion but lowered its gross margin guidance to 11 percent to 13 percent from a previous 12.5 percent to 14.5 percent.

Nevertheless, First Solar's management remains confident it can achieve these targets, as it has experienced bookings momentum throughout the first quarter.

Bottom line, the analyst acknowledged that the outlook for the solar market remains "challenging" but First Solar's pipeline, technology and balance sheet "should allow it to remain a market leader."

At last check, shares of First Solar were down 7.59 percent at $33.84.