First Solar: Is the momentum finally gone?
Amazing turn of events for First Solar today.
Goldman Sachs initiated coverage on First Solar (FSLR) with a ‘Buy’ rating and six month price target of $125. Goldman Sachs analyst, Michael Molnar, said he’s bullish on the solar sector for the next six months, as he expects increasing demand relative to supply and news on continued government support of solar energy efforts. However, he further went on to state that solar oversupply is possible in mid-to-late 2008 but believes in an oversupply situation, he prefers First Solar because of its manufacturing efficiencies and low production costs.
With Crude Oil hitting $80 today, this was a perfect day for First Solar to rocket and not look back. The stock was up pretty nicely in pre-market as you would expect on the upgrade. In the past an upgrade such as this (after all, it was Goldman Sachs) would have sent First Solar to the stratosphere. However, First Solar closed the day down almost 4%.
The stock closed yesterday at $102.19, opened today at $105.50, went as high as $108.51 but closed the day at $98.13.
Today’s price action was a total shock to me. I have been following this stock since late last year and got burned pretty bad shorting it. Since then, I have been able to recover most of my losses.
So is the stock finally loosing momentum? Was there some other factor involved that I am not aware of? Maybe we look back at this day as the start of a downtrend in First Solar? But then again this could be a total non-factor and doesn’t mean anything. Trust me, anything is possible when it comes to First Solar. Let’s see what tomorrow brings.
Either way, I have been adding additional Puts and will continue to do so in the near term.
By the way the comment by Goldman Sachs, solar oversupply is possible in mid-to-late 2008, can’t be good for the overall Solar sector.
* I am short First Solar (FSLR)
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