Analysts: Right Move On YieldCo For First Solar

First Solar, Inc.'s (NASDAQ: FSLR) decision to refrain from spinning out assets in a so-called yieldco disappointed investors Friday but analysts called it a sound long-term plan.

The Tempe, Arizona-based solar electric plant maker's shares fell 11 percent Friday, trading recently at $50.10 per share.

"The decision is the right one in the long-term," Bank of America's Krish Sankar said in a note Friday maintaining an Underperform rating.

Competitor Sunedison Inc (NYSE: SUNE) earlier this year spun out its retained assets in the form of TerraForm Power Inc (NASDAQ: TERP) and many had expected First Solar to follow a "me-too" strategy.

"We've decided to exercise patience," Chief Executive James A. Hughes told investors in a conference call. But Hughes said the company will hold assets longer and start breaking out results for its retained ownership starting in 2015.

"They've made the right decision," Brean Capital's Michael Gaugler said, adding that a yieldco "isn't necessary to provide low-cost capital" and won't offer tax advantages or wider profit margins.

Gaugler said continued demand growth justifies his $83 target and Buy rating.

"Not all problems are nails if you have a hammer," Credit Suisse's Patrick Jobin said, although he noted that retaining more assets could pressure margins next year.

Jobin maintained a Neutral rating and $70 target.