Why First Solar, Inc.'s Shares Plunged Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of First Solar, (NASDAQ: FSLR  ) fell as much as 10% today after the stock was downgraded by an analyst.

So what: Goldman Sachs analyst Brian Lee downgraded the stock from buy to sell and put a $45 price target on the stock. Lee thinks First Solar's earnings will decline because it has almost 100% exposure to the utility market and no exposure to the growing residential market.  

Now what: We don't like to put too much stock in Wall Street's recommendations because they have a history of underperforming the market and also have little incentive to get their buy and sell calls right. As for First Solar, it's true that the company is shut out of residential solar but we need to keep in mind that the utility scale solar business is much larger than residential solar and First Solar is a world class project builder. While I don't think the stock is the best in solar I think it's the safest way to play the industry and wouldn't give up on this industry giant just yet.

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  • Report this Comment On January 06, 2014, at 5:43 PM, hawkise wrote:

    Do as Goldman does

    not as Goldman says

  • Report this Comment On January 06, 2014, at 6:00 PM, saba100 wrote:

    I wonder if last night's 60 Minutes report on "Clean Tech," which included a negative spot on Solyndra and other solar players, had as much to do with today's response to FSLR's stock price as the analyst's downgrade. Perhaps the downgrade was prompted by the 60 Minutes report, which is being panned as being overly harsh on "Clean Tech."

  • Report this Comment On January 06, 2014, at 10:03 PM, SkinsRule44 wrote:

    There is a post by josh brown over on stocktwits which outlines Goldman's record on FSLR upgrades and downgrades and the subsequent performance of the stock. It's pathetic... I mean really bad. How and why do these recommendations move the market?!?!

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