Thursday, April 26, 2012

Here's Why First Solar Just Hit a 52-Week Low

Shares of First Solar (Nasdaq: FSLR ) hit a new 52-week low on Thursday. Let's look at how it got here and see whether a stormy forecast lies in its future.

How it got here
For First Solar shareholders, the past year has been nothing short of brutal, with the stock losing more than 85% of its value. At the heart of First Solar's problems has been a glut in solar-panel supply, combined with rapidly falling prices for its panels. Despite leading the charge in solar-panel efficiency, First Solar has been unable to ward off the effects of the German government's cutting of solar subsidies by 30% going forward as well as Chinese solar companies such as Suntech Power (NYSE: STP ) and LDK Solar (NYSE: LDK ) , which, thanks to subsidies, cheap labor, and low-lending rates in China, are able to undermine First Solar's pricing advantage.

Although First Solar was able to stick to its forecasted EPS guidance of $3.75 to $4.25 in fiscal 2012, it was again forced to reduce its revenue expectations for the year by $200 million since it will be idling production capacity.

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