First Solar Shares Rebound 13%, But Execution Risk Remains

After falling 25% Tuesday following news of the CEO departure, First Solar shares rebounded 13% Wednesday to approach some analysts’ sharply lower price targets.

First Solar (FSLR) shares were trading up 12.78%, or $5.55, to $48.82 at midday. Many doubts remain about management’s ability to execute on cost management and M&A activity.

Among recent upgrades and downgrades of First Solar shares, ratings appear inconsistent. But the price targets, many of them cut in half, congealed around the $50 mark

• Collins Stewart: reiterated its Buy, price target $60.
• Kaufman Brothers: downgraded from Buy to Hold, price target $50.
• UBS: Downgraded from Buy to Neutral, price target $50
• Wunderlich: reiterated Hold, price target $50.

Ticonderoga analysts must be doing a small victory dance:� the firm downgraded First Solar in mid-October from Neutral to Sell.

UBS Analyst Stephen Chin questioned if current management can close a sale of First Solar’s 550-megawatt Topaz project to Enbridge (ENB), a potential $2.2 billion deal, and writes that,

“only 25% of First Solar�s 3rd party module sales in 2012 (1500+MW) are contracted. We believe uncertainty at the senior management level in the light of recent departures, lack of execution on the cost roadmap and third party contracts beyond 2011 is a near term risk. We lower our FY12 and FY13 estimates to $6.25 and $8.00 from $10.00 and $11.00 previously.”