Further gains likely for First Solar stock
Ryan Randazzo, The Arizona Republic, Dec. 14, 2007
Source: The Arizona Republic
http://www.azcentral.com/arizonarepublic/business/articles/
1214biz-firstsolar1214.html
Analysts say high-flying First Solar Inc. of Phoenix could continue to gain altitude, projecting its shares to rise as much as $100 or so from their Thursday close of $248. The reports follow moves by two top executives this week to exercise options that netted them more than $5 million because of the stock’s huge gains in the past year.
The stock closed even higher Thursday despite the U.S. Senate stripping renewable-energy incentives from the energy bill being considered in Congress, which would have helped the company expand into the U.S. market.
But analysts say the company doesn’t need any help from lawmakers. They now project First Solar to beat its competitors in the race to make traditionally expensive solar power as cheap as traditional energy such as coal.
“We expect First Solar will be able to sell its modules at $2.10 per watt (of electricity it can generate by late 2009), which we believe is equivalent to traditional electricity costs in sunny regions,” USB Securities analyst Stephen Chin wrote in a report suggesting a price target of $350 for First Solar shares.
International market
The company sells its thin solar panels for use in large generating plants, and most of its business is in Germany. “We expect the company to next focus on Spain, France and Italy, and then focus on Canada, Greece, Portugal, South Korea and the United States,” Chin said. If the company meets expectations, it could receive more accolades.
“We believe, in time, (First Solar) has the potential to be the first pure-play, clean-tech company listed on the S&P 500,” Banc of America Securities analyst Eric Brown said in a separate report Thursday. Brown raised his price target $50 for the company to $300 in his report, which referred to First Solar as a “juggernaut.”
Both estimates are well above the average target price of $252 that 13 analysts polled by Thompson Financial Network suggest for the company. Chin said First Solar would benefit the most if Congress extended incentives for solar construction, which looked doubtful after the report was issued.
However, Arizona, which already has a renewable-energy requirement for utilities, recently announced plans for a solar-thermal power plant, which utilities said is cheaper than solar panels like First Solar’s. Solar-thermal plants use mirrors, not semiconductor-filled black panels such as First Solar’s, to create heat.
The analysts still like First Solar because it has so much business lined up in contracts: 3.5 gigawatts of panel production through 2012. By comparison, Google Inc. drew worldwide headlines recently when it announced plans to generate just 1 gigawatt of renewable energy in a “few years.”
Reaping the benefits
First Solar executives are reaping the benefits of their deals. Executive Vice President Kenneth Schultz used options to buy 20,000 shares for $2.06 each on Tuesday, according to Securities and Exchange Commission filings. He sold them the same day for $245.96 each, netting $4.88 million excluding taxes. The same day, Chief Financial Officer Jens Meyerhoff used options to buy 3,125 shares for $20 each. He sold them for the same price as Schultz, for a net $706,140 before taxes.