First Solar's Massive New China Deal Is No Slam Dunk

first solar

First Solar (FSLR) just hit it big in China.

This week, the company announced a memorandum of understanding with the Chinese government to build a 2 gigawatt solar power plant in Mongolia. But it’s not necessarily reason to buy the stock here.

A new Deutsche Bank research report calls First Solar (FSLR) a ‘hold:’

We believe First Solar’s clear industry leadership, lowest LCoE, and strong efforts in China yielded this MOU win. We view this as a potential long-term positive, but with many issues yet to be defined; this deal has great potential but is hardly closed. Considering near-term industry and pricing pressures we maintain our Hold rating. 

The risks? DB lists near-term oversupply (which we’ve noted); currency fluctuations; changes
to policy and incentive programs; and general economic risk.

While iSuppli was positive about First Solar this week, most analysts echo DB’s caution that there are still plenty of uncertainties in the solar market.

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