First Solar, Inc. is scheduled to report its Q1 2010 results after the market closes on April 28, 2010. Although First Solar had a stronger than expected Q4 2009, management reiterated its prior C10 guidance, making no changes to either revenue or EPS ranges. The company continues to expect ASPs to weaken in C2H10 following the subsidy reduction Germany is planning on enacting. However, a positive backdrop exists for the industry, which should positively influence First Solar Inc.
First Solar, Inc. is engaged in the manufacture and sale of solar modules with an advanced thin film semiconductor technology, and it designs, constructs and sells photovoltaic (PV) solar power systems. It operates the business in two segments: components segment and systems segment. Components segment designs, manufactures and sells solar modules to solar project developers and system integrators. Systems segment provides PV solar power system for commercial systems, which includes project development, engineering, procurement and construction (EPC), operating and maintenance (O&M) services and, when required, project finance. In April 2009, First Solar acquired the solar power project development business of OptiSolar Inc.
As for Q4 2009, net sales were $641 million, up 33% QoQ. The selling of Sarnia and Blythe drove $142 million in net income. Q4 diluted EPS was $1.65, bringing the 2009 EPS to $7.53, which was up 78% YoY. Strong cash positioned the company well; as it finished the year at $1.1 billion in cash and marketable securities and generated an additional $395 million free cash flow. It executed its operations well in Q4 2009; produced 311 MW and finished the year with 1.1 GW of production, in addition to achieving a milestone of over 2 GW cumulative production and sales.
Analysts' estimates for Q1 2010 range from a low of $1.29 to a high of $1.97, compared to a consensus estimate of $1.67, with number of estimates being 36 and the co-efficient variance 9.38. Crystalline silicon modules prices remain stable, which translates to less ASP pressure for FSLR. Project financing conditions, especially in the US, will continue to improve. US Utility scale RFPs are expected to increase driving growth for the company. However, there are some issues, which might influence earnings negatively: (1) Competitiveness of FSLR vs. Chinese modules; and (2) Contingency plans for modules destined for the German ground-mounted market on agricultural land in 2H10.
The stock closed $ 131.95, down +1.43% on April 26, 2010 and most analysts' recommend this stock as a relative Overweight with an average price target of $141.50. FSLR is the market leader after challenging industry headwinds in 2009. Despite a difficult 2009, which included tight lending conditions, a drop-off in global demand, and a price war with Chinese c-Si competitors, FSLR managed to grow annual earnings 78% YoY and position itself for further growth in 2011. Furthermore, the company believes it can maintain its high module margin in spite of the expectation that competitive product ASPs will continue to fall.
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