First Solar, Inc.

FSLR Details

First Solar, Inc. (NASDAQ: FSLR) is a major American solar technology company and a global provider of photovoltaic (PV) solar energy solutions based on innovative thin-film technology. To convert sunlight into electricity, the firm uses PV panels made of Cadmium Telluride (CdTe). The firm generates revenue from two segments: 1) Modules, which manufactures and sells CdTe solar modules to third-party customers, and 2) Systems, which provides power plant services including project planning, EPC services, and operations and maintenance (O&M) services to independent power producers, commercial companies, and other system owners.

Zero emissions by 2050: FSLR announced its target to attain net-zero emissions by 2050 on August 12, 2021. It also declared that it would lower its absolute Scope 1 and Scope 2 greenhouse gas (GHG) emissions by 20% by 2028, compared to 2020 emissions.

Capacity Expansion in India: FSLR announced plans to invest USD 684 million in a new, fully vertically integrated photovoltaic (PV) thin-film solar module manufacturing facility in India on July 29, 2021. The innovative plant will be built in Tamil Nadu and will begin operations in the second half of 2023. The planned facility's nameplate capacity is expected to be 3.3 gigawatts (GW).

6MFY21 Results: FSLR reported a 21.97% rise in net sales to USD 1.43 billion during 6MFY21 (ended June 30, 2021) compared to USD 1.17 billion during 6MFY20, primarily driven by an increase in the volume of modules sold to third party customers. The company reported a sharp increase in net income to USD 292.12 million during 6MFY21 compared to USD 127.61 million during 6MFY20. As of June 30, 2021, its cash and cash equivalents (including marketable securities) were USD 1,765.39 million and its total debt was USD 279.32 million.

Key Risks: FSLR's third-party solar module sales were mostly in the US and France during FY20, while its solar power system sales were primarily in the US and Japan. The concentration of the company's net sales in a small number of geographic regions exposes it to local economic, public policy, and regulatory risks.

Outlook:

FY21 Guidance (Source: Q2FY21 Press Release, July 29, 2021)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

FSLR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: FSLR share price has increased 36.16% in the past three months and is currently leaning towards the higher band of the 52-week range of USD 59.52 to USD 112.50. The stock is currently trading significantly above its 50 and 200 DMA levels, and its RSI Index is at 71.59. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 85.09. Considering the significant rise in the stock price, we believe it adequately reflects the decent business fundamentals. Hence, we recommend a "Sell" rating on the stock at the current price of USD 97.44, up 0.87% as of August 16, 2021, at 01:40 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.