Shares of First Solar Respond to Goldman Sachs Downgrade

In a report published Monday, Goldman Sachs analyst Brian Lee analyzed the 2014 outlook and solar energy. Lee downgraded First Solar (NASDAQ: FSLR) from Buy to Sell and lowered the price target from $61.00 to $45.00.

Despite that First Solar accounts for 65% of the market, the “robust” demand for US utility-scale solar projects and the key driver of 2H13 bookings momentum, Lee noted that “US growth shifting away from utility-scale to rooftop in coming years, with an estimated volume CAGR of 8% vs. 45%, respectively, through 2016. With its low-efficiency technology ill-suited for rooftop, we see First Solar as mis-positioned vs. US solar peers.”

The analyst added that although the stock has been up 32% in the past three months, this strength was driven by multiple expansion. Goldman Sachs expects this to reverse on likely cuts to 2015 project MW targets, multi-year EPS declines, and near-term bookings risk.

Lee reduced 2014 and 2015 estimated EPS by 9% and 28%, respectively. The analyst believes that First Solar is at risk of missing a greater than 1:1 book-to-bill exiting 2013. Goldman Sachs introduced a 2016 estimated EPS of $2.91.

Shares of First Solar closed at $56.74 on Friday and has traded as low as $51.01, down 11.233%.