First Solar stock jumped Wednesday, shaking off the gloom hanging over stocks in the broader solar energy sector. The solar panel manufacturer reported fourth quarter results and an outlook for 2024 that impressed Wall Street.
First Solar reported Tuesday said that it earned $3.25 per share on sales of $1.2 billion for the December quarter. On average, analysts projected the Arizona-based company would post earnings of $3.14 per share on sales of $1.31 billion, according to FactSet. For the same period a year earlier, First Solar lost 7 cents per share on sales of $1 billion.
The company highlighted for investors that it was expanding capacity to meet a growing backlog of solar projects, despite a broader slowdown for the industry.
"Over the past year, we expanded manufacturing capacity, mobilized at our latest announced facility in Louisiana, produced and shipped a record volume of modules, expanded our contracted backlog to historic levels and increased R&D investment," First Solar Chief Executive Mark Widmar told analysts Tuesday night.
On the stock market today, First Solar stock rose more than 5% to 153.09 in early trading.
First Solar's Outlook For 2024
For the 2024 fiscal year ending with December, First Solar guided for sales between $4.4 billion and $4.6 billion. Coming into the report, analysts were projecting First Solar would tally $4.56 million in sales for all of 2024, according to FactSet.
Further, First Solar projects that its earnings per share for 2024 will fall between $13 and $14. That would nearly double its 2023 earnings per share of $7.74. Analysts were projecting a 2024 EPS of $13.26 for First Solar heading into the report, according to FactSet.
"FSLR has been executing consistently the last few quarters, not only scaling manufacturing capacity ... but also producing and shipping record volumes," wrote Evercore ISI analyst James West in a client note following the report.
Evercore ISI reiterated a neutral rating for FSLR stock with a 227 target price. But the team of Evercore analysts led by West wrote that First Solar is among U.S. solar manufacturers best-positioned to benefit from tax credits built into the U.S. Inflation Reduction Act.
First Solar officials said the company's manufacturing capacity is sold out through 2026. But the company has added to its backlog. During the final three months of the year, First Solar booked deals worth 2.3 gigawatts at an average selling price, or ASP, of 31.8 cents per watt, up for 30 cents in the September quarter.
"The (quarter over quarter) increase in bookings ASP underscores the strength of demand for FSLR's U.S. produced thin-film modules, in our view," wrote UBS analyst Jon Windham in a Tuesday client note. UBS rates First Solar stock a buy with a target price of 250.
First Solar Expanding Capacity
Prior to earnings late Tuesday, First Solar shares had lost 15% to start 2024.
The broader solar industry was stung last year by high interest rates that made projects harder to finance. IBD MarketSmith's Energy-Solar industry group fell 28% in 2023, ranking among the worst-performing groups.
First Solar, which is the largest U.S.-based solar panel manufacturer, gained 15% in 2023 before slumping at the start of this year. Wall Street analysts have been more bullish on First Solar in 2024, as well. An upgrade to a buy rating from Morgan Stanley in December noted First Solar's sold out its manufacturing capacity through 2026.
Under the Inflation Reduction Act, solar projects using equipment made in the United States can qualify for bonus tax credits. That has helped drive demand for First Solar. The company is investing to add manufacturing capacity in Alabama, Louisiana and Ohio. First Solar projects its global manufacturing capacity will grow to 25.2 gigawatts by 2026, compared to 16.6 gigawatts last year, as outlined in its Q4 investor presentation.
FSLR Stock: Technical Ratings
Still, First Solar came into the fourth-quarter report with a so-so IBD Composite Rating of 45 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating to give an overview of a stock's performance.
Further, First Solar's IBD Relative Strength Rating was 17 out of 99, indicating significant underperformance of the broader market. The rating compares a stock's price movement over the last 52 weeks with that of others in IBD's database.
On the more positive side, First Solar has an EPS Rating of 81 out of 99, indicating strong earnings growth.
