Shares of First Solar Inc. (FSLR) are down about 51% over the course of 2016, due to a variety of factors including an overall difficult alternative-energy market, the announcement of a massive company restructuring alongside a major layoff and the surprise election of a president-elect, Donald Trump, who is seemingly hostile to support for renewable energy. (See also: Renewable Energy Suffers From Trump Win.)

With oil prices hovering around 10-year lows, energy companies in general have found it tough to turn a profit amid ultralow pricing. The market reacted poorly to First Solar’s report in mid November, as management slashed guidance in light of plans to accelerate the production of a more cost-competitive model. The Tempe, Ariz.-based firm said it would phase out its current model Series 4 solar panels, scrap plans for a Series 5 and go ahead with fast-tracking the production of a Series 6.

New Model to Provide Returns in 2019

Despite disappointment regarding a $500 million to $700 million cost in impairments, along with a 25% trim of the firm’s employees, many analysts foresee the changes as a necessary step for the solar leader to stay ahead in the market as panel prices decline.

A reduction in the price of solar systems, while a great incentive for adoption on the consumer side, is difficult for companies such as First Solar attempting to stay above water with funds to invest in the future. Guggenheim Securities analysts foresee the sale price of S6 modules falling 25%, while the cost of producing them will drop 40% over the same period. This gives First Solar the upper hand as organizations around the world wean off reliance on fossil fuels and other low-cost traditional power sources. First Solar foresees its more cost competitive offering paying off big time in 2019. (See also: First Solar Initiates Restructuring Plans to Place it at Back on Top of Industry .)

 

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