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First Solar Falls on BofA Downgrade, Target Cut to $65.50

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By Dhirendra Tripathi

Investing.com – First Solar stock (NASDAQ:FSLR) traded 3.6% lower Tuesday after BofA Securities downgraded it to ‘underperform’ and cut the target to $65.50, around 23% lower than its current level of $81.51.

Analyst Julien Dumoulin-Smith was earlier ‘neutral’ on the stock with a target of $76.5.

According to StreetInsider, the analyst believes that too much “good” news is priced into the shares, making them “susceptible to significant derating”.

The U.S. Department of Commerce is investigating alleged circumvention of antidumping and countervailing duties by solar manufacturers in Asia. While one would expect any punitive measure by the Department to be a tailwind for the company, the analyst believes the policy has consistently failed to drive pricing power.

“We highlight still rising aluminum costs, and pass through on elevated bunkers as yet to materialize on freight in particular,” the analyst wrote in a client note.

The company last month disappointed with its fourth-quarter numbers.

October-December net sales rose 50% to $0.9 billion but were still short of estimates. Full-year sales were $2.9 billion, and the company is now projecting that to fall to at least $2.6 billion in the current year. Sales could be even lower at $2.4 billion, according to the company’s guidance.

The company closed December with a contracted backlog of 26.2 GW.

The company issued a wide range for its 2022 projected operating income, implying a significant fall to $55 million-$155 million in 2022 from $587 million. The company blamed this on production start-up expenses and underutilization of losses related to factory upgrades.

The company is setting up new factories in India and Ohio.

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