First Solar (FSLR) Investors Sell, Analysts Split Following Q4 Beat

Shares of First Solar Inc. (NASDAQ: FSLR) are down 5 percent to $156.46 in midday market movement on Friday after the company reported its fourth-quarter results on Thursday after the closing bell.

The solar equipment maker reported fourth-quarter earnings of $1.80 per share, 4 cents better than the analyst estimate of $1.76 per share.

Revenue for the company fell to $609.8 million from $641.3 million in the same period last year, missing the market consensus of $647.8 million.

Looking forward, the company sees full-year 2011 earnings in the range of $9.25-$9.75 per share, topping the estimate of $9.10 per share.

Analyst Comments:

Goldman Sachs maintained a Conviction Buy rating on First Solar, while raising its price target on the stock from $165 to $190. "We expect a skittish short-term stock price reaction to solid results, a raised outlook and increased confidence in 30% earnings growth in 2011. Solid 4Q10 results and improved volume visibility drive higher estimates and fortify our view that First Solar will continue to stay a step ahead of the pack."

Wedbush is remaining cautious on First Solar, maintaining an Underperform rating on the stock, while raising its price target from $100 to $110. "We remain cautious on First Solar shares due to expected margin contraction, pricing pressure, project development risks, and feed-in-tariff changes in key markets. We believe oversupply conditions are likely to resume in 2011, pressuring ASPs and margins."

Kaufman Bros. is maintaining a Hold rating on First Solar with a $165 price target.
"The company benefited from higher gross margins, coupled with a lower tax rate during the quarter. Gross margins increased to 48.7% from 40.3% over the prior quarter as most of the recognized revenues came from FSLR's higher margin module business. We do not view the sequential decline in revenues is a concern as the EPC business is inherently lumpy."

Cantor Fitzgerald maintains a Sell rating on First Solar with a price target of $87.
"We remain cautious on 2H:11 as many countries begin to revisit subsidy rates. Although First Solar is in a position to mitigate some fluctuations by allocating to their own projects, we believe that a softening market will affect them more strongly than investors expect. We believe that First Solar remains well positioned to flourish in a market with low or no subsidies, but we suggest that investors wait for a more opportune time to accumulate shares."

Collins Stewart maintans a Buy rating on First Solar, while raising its price target on the stock from $165 to $180. "We believe FSLR will be one of the few companies in the solar industry to post robust EPS growth in CY12. FSLR's superior margins, ROIC, and backlog lead us to use a higher P/E multiple in its price target than we use for its competitors' price target."

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