First Solar Heats Up Rebound In Solar Energy Demand

Key Points

• First Solar is a leading thin-film solar module manufacturer, which closed 2023 with a record backlog.
• First Solar reported a Q4 2023 EPS beat by 11 cents as revenues rose 15.5% YoY.
• The company expects to grow its capacity to 25 MW worldwide by 2026.

First Solar Inc. NASDAQ: FSLR is a leading thin-film photovoltaic (PV) solar panel manufacturer. Solar energy stocks had a rocky 2023 but will heat up again in 2024. The Invesco Solar ETF NYSEARCA: TAN is down 41.5% in the past year. However, it has been curbing losses down 14.2% year-to-date (YTD). First Solar is starting to see demand rising as the federal grants from the Inflation Reduction Act payout.

Federal solar tax credits under the Residential Clean Energy Credit are income tax credits that can cut the price of solar installation by 30%. This incentive can mean a $6,000 tax credit on a $20,000 solar installation at a primary or secondary residence. This oil/energy sector may see a reprieve from the selloff in 2024.

Thin Film Versus Crystalline Panels 

First Solar is the leader in thin-film solar panels. There are mainly three types of PV solar panels. Crystalline silicon panels are comprised of monocrystalline panels, which are the most expensive, with over 19% efficiency and are best suited for users with limited roof space. Polycrystalline is the mid-priced choice when space is not limited, with an average of 15% to 17% efficiency.

Thin-film panels are made from Cadmium Telluride (CdTe) or Copper Indium Gallium Selenide (CIGS) is the lowest-priced option. It typically has less than 15% efficiency and is best for large commercial and industrial rooftops. Thin film tends to perform better under low-light conditions and is most cost-effective for enterprise customers. SunPower Corporation NASDAQ: SPWR manufactures its own monocrystalline panels called Maxeon, which it claims are the most efficient solar panels on the market. Get AI-powered insights on MarketBeat.

Improving fundamentals at First Solar

First Solar reported a Q4 2023 EPS beat of 11 cents, coming in at $3.25 versus $3.11 consensus analyst estimates. Revenues rose 15.5% YoY to $1.16 billion, falling short of the $1.31 billion consensus estimates. Full-year 2023 net income was $7.74 per share. Full-year net bookings were 28.3 GW. First Solar ended 2023 with $1.6 billion in cash, up from the previous forecast of $1.3 billion.

Mixed Guidance for First Solar 

First Solar provided in-line guidance for the full year 2024. It sees EPS of $13.00 to $14.00 versus $13.25 consensus estimates. Volume sold is expected between 15.6 GW to 16.3 GW. Operating income is forecast between $1.5 billion to $1.6 billion including production startup costs of $85 million to $90 million. Underutilization costs associated with factory ramp are expected to be between $40 million to $60 million. Section 45X tax credits are expected to be between $1 billion to $1.05 billion. Year end 2024 cash balance is expected to be between $900 million to $1.2 billion.  

First Solar CEO Insights

First Solar CEO Mark Widmar noted it was the Company's 25^th anniversary, marking it as one of the world's oldest and most experienced solar module manufacturers. It has produced and shipped record module volumes, and its backlog has grown to historic levels at 80.1 GW. The company added 10 new customers, securing 28.3 GW of net bookings at a base ASP of more than 31.8 cents per watt.

Capacity Expanding to 25 GW by 2026

The company has expanded its manufacturing capacity, investing $1.1 billion in a new facility in Louisiana, which is expected to add 3.5 GW to its nameplate capacity in 2026. Combined with its Alabama and Ohio manufacturing plants, it expects 2026 year-end nameplate capacity to grow to 14 GW domestically and an additional 11 GW internationally, for a total of 25 GW.

Widmar commented, “Over the past year, we scaled manufacturing capacity, mobilized at our latest announced facility in Louisiana, produced and shipped a record volume of modules, expanded our contracted backlog to historic levels, increased R&D investment, and continued to evolve our technology and product roadmap.”

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First Solar Daily Symmetrical Triangle Breakout

The daily candlestick chart on FSLR indicates a symmetrical triangle breakout pattern. The upper descending trendline commenced at $177.89 on January 2, 2024. The ascending lower trendline formed at the $135.88 swing low on February 5, 2024. The breakout occurred a week after its Q4 2023 earning release as shares staged a rally through the upper trendline on March 6, 2024.

The daily relative strength index (RSI) has been rising through the 60-band. Pullback support levels are at $156.88, $151.32, $141.76 and $135.88.