Goldman Sachs thinks it's time to sell the struggling solar stock
Shares of First Solar, Inc. (NASDAQ:FSLR) are down 2.9% in electronic trading, after Goldman Sachs cut its rating on the solar stock to "sell" from "neutral," and slashed its price target to $48 from $75. The brokerage firm cited an unappealing risk/reward ratio, and said the sector is facing stiff cyclical headwinds, including oversupply created by China's newly imposed restrictions on solar projects. Credit Suisse also chimed in, and lowered its FSLR price target to $53 from $59.
It's been a rough stretch for FSLR stock, which is down 32% from its late-April highs near $82 to close last night at $55.53. What's more, the security logged its sixth straight loss on Wednesday. Another drop today would mark First Solar's longest daily losing streak in more than a year, and its lengthiest stretch below its 200-day moving average since May 2017.
And while more downgrades could pressure FSLR stock even lower, it looks like a number of options traders in yesterday's busy session set a short-term floor for the shares. Taking a quick step back, 35,286 puts and 33,221 calls were traded on First Solar Wednesday -- six times what's typically seen, and options volume hitting a 12-month high.
The July 50 put was most active due to what appears to be a 5,000-contract block that was sold to open. If this is the case, the put writer expects FSLR to hold above the half-century mark through the close on Friday, July 20 -- when the back-month options expire. FSLR hasn't closed a week below the round $50 mark since a late-October bull gap.