Shares of First Solar Inc. took a 4.5% dive in midday trading Tuesday, after BofA Securities analyst Julien Dumoulin-Smith turned bearish on the solar power systems company, saying “all the good news is priced in.” Dumoulin-Smith cut his rating to underperform from neutral, and his new stock price target of $65.50, down from $76.50, implies about 18% downside from current levels. He said that while the timing of his downgrade might seem counterintuitive, given that the U.S. Department of Commerce recently launched an investigation into Southeast Asia-based solar module manufacturers, but he emphasized that “policy has consistently failed to drive pricing power” for First Solar. In addition, Dumoulin-Smith said the structural backdrop on First Solar’s margins has deteriorated significantly, “with raw material and freight exposure a headwind that is unlikely to peel back any time soon.” He added that First Solar is unlikely to benefit from accelerating solar demand in Europe, given greater competition in that region. The stock has dropped 8.0% year to date, while the Invesco Solar ETF has gained 0.8% and the S&P 500 has slipped 4.5%.
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