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Q1 Preview: First Solar (FSLR) May See Impact from Subsidy Cuts, But Not Yet

First Solar, Inc. (Nasdaq: FSLR) shares are lower Tuesday as the maker of solar modules will report its first-quarter earnings figures after the market close. The stock last traded at $134.58, down 2.1 percent from Monday's closing price.

Analysts are currently expecting First Solar to issue EPS of $1.16 on revenue of $544.37 million. Last quarter, the company had EPS of $1.80 on sales of $609.8 million. First Solar produced earnings of $2.00 per share on sales of $568 million during the same quarter last year.

Shares gained 21 percent through the quarter and are down 16.6 percent since.

First Solar's trades at a P/E of 12.3x FY12 EPS estimates, compared with 7.6x at Suntech Power Holdings Co. Ltd. (NYSE: STP), 4.0x for LDK Solar Co. (NYSE: LDK), and 7.7x for Yingli Green Energy Holding Co. Ltd. (NYSE: YGE).

Data from Bloomberg has 23 analysts with a Buy on First Solar, 15 with a Hold, and seven suggesting to Sell. The analyst price target average is $162, with a high of $200 and low of $87. Shares have traded in a range of $175.45 - $100.19 over the last 52-weeks.

Analyst Summary

  • Wedbush is expecting EPS of $1.12 on revs of $525 million. Wedbush is cautious on First Solar shares "due to expected margin contraction, pricing pressure, project development risks, and feed-in-tariff changes in key markets." The firm believes "guidance and commentary implies 2 GW of production with 1.6 GW module sales and 400 MW systems business in 2011. We are modeling implied module ASP of $1.30/watt, system module ASP of $1.70/watt and EPC evenue of $2.30/watt in 2011."

  • Kaufman expects EPS of $1.13 on revs of $558 million. Because Kaufman believes First Solar is the lowest cost provider in the solar space, the firm remains bullish on shares into the report. "Because of the slow start to the year, investors have moved to the sidelines, but we believe it is important to get back into the stock ahead of the earnings report as the company is likely to give strong guidance for next quarter and, at the very least, reaffirm its full-year guidance. Importantly, the company is benefiting from an improvement in the USD/Euro exchange rate. The company issued its guidance at an assumed rate of $1.30/Euro, while the average in the first quarter was around $1.38/Euro and is currently at $1.45/Euro."

  • Hapoalim Securities recently lowered estimates on First Solar, now looking for EPS of $1.20 on revs of $530 million. The move was made to reflect: "(1) an industry-wide slowdown amidst a harsh winter in Germany and regulatory dislocations in Italy in March and (2) a shift in our timing of systems shipments to 2H11."

    Hapoalim also considers risks moving forward: "(1) abrupt policy changes dislocating demand in Italy and France, (2) a slowdown in German demand which likely needs further module ASP declines to overcome, (3) an industry-wide inventory build that may require a couple quarters to absorb, and (4) a mounting supply/demand imbalance in 2H11, we expect the solar industry to rapidly transform into a buyer's market with industry pricing coming under pressure."

  • Collins Stewart is looking for EPS of $1.10 on revs of $535 million. The firm's forecast is "based on First Solar shipping 325MW modules to 3rd party customers and recognizing 40MW of project sales in the quarter...Based on a cost per watt assumption of $0.75, which includes the impact of one-time start up costs at its new Malaysian facility, our gross margin forecast of 42.3% represents a 640 bps sequential decline."

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results withi0 n seconds of the release.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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