First Solar jumps on strong quarter, record backlog in rare bright spot for beaten-down renewable sector

Core Viewpoint - First Solar reported strong quarterly results, with a significant order backlog and resilience against sector downturns, indicating solid growth prospects ahead [1][2][3]. Financial Performance - Net income increased by 30% year-over-year to $349.2 million from $268.3 million [1]. - Earnings per share reached $3.25, surpassing the LSEG estimate of $3.13 [1]. - Revenue was $1.15 billion, slightly below the consensus forecast of $1.31 billion [1]. - The company achieved strong margins of 43.3%, exceeding consensus estimates of 37.7% [1]. Market Position and Outlook - First Solar has a record order backlog of 80.1 gigawatts, fully booked through the next two years [1]. - The company has outperformed the broader solar sector, with only a 6.2% decline over the past 12 months compared to a 43% drop in the Invesco Solar ETF [2]. - Analysts from JPMorgan, Deutsche Bank, and Morgan Stanley have raised their price targets, indicating significant upside potential for the stock [2][3]. Strategic Insights - First Solar's focus on large, utility-scale projects has insulated it from macroeconomic challenges affecting the residential solar sector [2]. - The company is expanding capacity with two new U.S. facilities under construction [3]. - CFO Alexander Bradley indicated that the company will be "highly selective" with contracting in 2024 due to potential uncertainties from upcoming U.S. elections [3]. Risks and Challenges - Potential headwinds include a slowdown in bookings after two strong years and concerns over the impact of U.S. tax credit changes if Republicans gain control [3]. - CEO Mark Widmar highlighted challenges from Chinese subsidization and oversupply in key international markets [4]. - Goldman Sachs lowered its price target for First Solar, citing risks from solar module oversupply and potential changes to U.S. tax credits [4].