First Solar Inc

First Solar, Inc. (NASDAQ: FSLR) is a solar technology company and global provider of photovoltaic cells (PV) solar energy solutions. The Company manufactures and sells PV solar modules with a semiconductor technology, which provides an alternative to conventional crystalline silicon PV solar modules. The Company operates through two segments: Modules Business and Other. 

Key Business & Financial Updates

• Financial Performance Overview: First Solar, Inc. reported net sales of USD 0.9 billion for the third quarter of 2024, a decrease of USD 0.1 billion compared to the preceding quarter. This reduction was primarily driven by a decline in megawatt (MW) sales volume and a USD 50 million product warranty reserve charge. These factors were partially mitigated by termination payments received from select customers in the United States and India.
• Earnings and Shareholder Returns: The company recorded net income per diluted share of USD 2.91 for the third quarter, reflecting a decrease from USD 3.25 in the second quarter of 2024. This decline was largely influenced by the product warranty reserve charge. Despite this, First Solar demonstrated resilience in maintaining its commitment to operational efficiency and shareholder returns amidst challenging industry conditions.
• Cash Position and Investment Activities: First Solar’s net cash balance, which includes cash, equivalents, restricted cash, and marketable securities, less debt, stood at USD 0.7 billion at the end of the third quarter, a decline from USD 1.2 billion in the previous quarter. This decrease was attributed to significant capital expenditures related to the construction of new manufacturing facilities in Alabama and Louisiana, as well as an increase in working capital requirements to support ongoing operations.
• Strategic Outlook Amid Industry Challenges: In addressing the evolving industry landscape, CEO Mark Widmar emphasized the company’s strategic focus on balancing growth, profitability, and liquidity. He highlighted First Solar’s ability to navigate industry volatility and political uncertainty, particularly in light of the upcoming U.S. elections and continued instability within the solar manufacturing sector. Widmar reiterated the importance of a disciplined, long-term approach to ensure sustainable progress and operational excellence.
• Revised Financial Guidance for 2024: First Solar updated its 2024 financial guidance to reflect revised expectations across several key metrics. The company now anticipates net sales of USD 4.10 billion to USD 4.25 billion, adjusted from its prior range of USD 4.4 billion to USD 4.6 billion. Gross margin is expected to range between USD 1.95 billion and USD 2.00 billion, with operating income projected between USD 1.48 billion and USD 1.54 billion. Earnings per diluted share are forecasted at USD 13.00 to USD 13.50, while capital expenditures are expected to range from USD 1.55 billion to USD 1.65 billion.
• Forward-Looking Considerations: The revised guidance reflects assumptions related to Section 45X tax credits under the Inflation Reduction Act of 2022, as well as the anticipated timing and ability to monetize these credits. Investors are encouraged to review First Solar’s detailed financial materials and participate in the company’s quarterly earnings call for further insights into its financial results, updated guidance, and strategic initiatives.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 42.73, consolidating oversold zone, with the price taking reversal from an important support zone of USD 170.00-USD 180.00, with expectations of some support if these levels sustain. Additionally, the stock's current positioning is below both 50-Day SMA and 200-Day SMA, which can act as a short to medium term resistance levels.

As per the above-mentioned price action, momentum in the stock over the last month, current macroeconomic scenarios, recent business & financial updates, and technical indicators analysis, a ‘BUY’ rating has been given to First Solar, Inc. (NASDAQ: FSLR) at the current market price of USD 186.63 as of November 22, 2024, at 08:10 am PST. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is November 22, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.s

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.