First Solar Inc. tumbled the most since November after RBC Capital Markets LLC said the producer of solar energy systems won’t meet its own revenue and profit targets for 2016.
First Solar’s revenue will barely grow this year and next, RBC analyst Mahesh Sanganeria said, compared with the company’s estimates for an increase of 19 percent in 2015 and 2.5 percent in 2016. RBC cut its rating on shares of the Tempe, Arizona-based company to the equivalent of sell from hold, and dropped its 12-month price target to $34 from $54. First Solar plunged 7.3 percent to $51.06 at 4 p.m. in New York, the steepest drop in the Standard & Poor’s 500 Index.
The biggest U.S. producer of solar modules may lose its cost advantage over makers of more efficient panels, hampering its ability to win orders for large-scale power plants, Sanganeria said in a note to clients Tuesday. First Solar could counter that by boosting sales to third parties, but would have to cut selling prices and erode profit margins, he wrote.
“The company’s high exposure to utility scale projects and the long lead-time and development cycle of those projects” will make it difficult for First Solar to meet its revenue forecast, Sanganeria wrote.
First Solar reported on April 30 its first quarterly loss in three years, as revenue tumbled amid plans to form a joint venture with SunPower Corp. that will own and operate power plants. The move delays the recognition of revenue from the sale of the projects.
Steve Krum, director of corporate communications for First Solar, declined to comment.
First Solar has become a leader in building solar power plants because its panels are cheaper to produce than crystalline-silicon modules, which are more efficient at converting sunlight into electricity.
That cost advantage has diminished in recent years, and RBC estimates the better-performing silicon modules will only cost 2 cents more per watt than First Solar’s by the end of this year.
“First Solar may lose its cost advantage for the whole system compared to competitors using multicrystalline silicon technology,” Sanganeria wrote.