Blog Post

Can First Solar Shake the Earnings Blues?

Solar companies have spent the past few weeks reporting their latest quarterly results, and the sector is looking battered. Many big names reported discouraging financials for the last three months of 2008, then followed up with even less cheery forecasts for 2009.

But after the stock market closes Tuesday, the solar industry’s favorite son, First Solar (s fslr) steps up with its report. And if any company can buck the trend, it’s First Solar. The stock has held up relatively well so far in 2009; as of Monday’s close it was down 9.5 percent. The S&P 500, by contrast, is down 18 percent. Other solar companies are down even further: Solarfun (s solf) has fallen 43 percent this year, JA Solar (s jaso) has slid 52 percent, and Evergreen Solar has lost 63 percent of its value.

The reasons for the solar slump are simple enough. The credit crunch is hurting the ability of solar panel manufacturers to raise capital to expand future production. The prices of their goods are falling quickly — a welcome development in the long run since it will make solar panels an attractive option to traditional energies — but a grueling process until then. And despite hopes that governments will boost spending on solar energy, there are lingering concerns that at some point that public money may dry up.

Optimists hope it will be different for First Solar. The company is one of the most favored by alternative-energy investors. It’s still winning deals in high-profile projects around the world. And there are indications that its thin-film solar technology is already as cheap as conventional electric power.

But some on Wall Street are rethinking what up until had been a healthy consensus forecast. As Barron’s noted, certain analysts cut their forecast or price target for First Solar on Monday, citing concerns about the company’s outlook for this year. First Solar’s stock ended the day down 7 percent at $124.84.

That leaves a lower bar for First Solar to jump over, if it can. But if First Solar can’t impress investors, it could spell bad news for other solar stocks.