Bachman and Stone Weigh in on First Solar (Nasdaq:FSLR) - Both Maintain OUTPERFORM Rating

Apr 30, 2009
Author: SCP Editor

April 30, 2009 – Analyst Comments – Pacific Crest’s Mark Bachman and Cowen’s Rob Stone commented this morning on First Solar’s (Nasdaq:FSLR) results, each maintaining an OUTPERFORM rating on the stock, with Stone forecasting 30%+ upside potential vs. the market in 12 months and Bachman increasing his price target to $231, 25x his 2010 EPS estimate of $9.24.

Financial ResultsFirst Solar (Nasdaq:FSLR) reported a 112% Y/Y increase in Q1 revenues to $418.2 million, and earnings of $164.6 million, or $1.99 per share, compared with earnings of $46.6 million, or $0.57 per share for the same period last year. Consensus expectations were for earnings of $1.50 per share.

Stone’s Comments

·         Higher GM and lower cost per watt and a tax benefit drove Q1 results

·         Co-investment in a large German project demonstrate the ability to catalyze market expansion, enhancing scale and capacity expansion

·         Raised 2009E revenue to $1.9B on shipments of 943MW, while reducing ASP slightly to $1.91 and costs/W slightly to $2.92.

·         Maintains OUTPERFORM

Bachman’s Comments

·         Manufacturing costs of $0.93/watt beat Bachman’s estimate of $0.94/watt, and drove upside to EPS. Bachman noted that the Street has been so focused on declining ASPs that it has been largely ignoring the cost side of the equation

·         Sees gross margin staying above 50% in 2009

·         “The bears will be hard pressed to poke holes in this report.” He said bears on the stock will remain focused on ASP declines, inventory increases and days of sales outstanding increases.

·         Raised target to $231 from $227 based on 25x his 2010 EPS estimate of $9.24.