This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

First Solar Preview: It's About the Outlook

The fact that First Solar has only provided a total pipeline number in the past, and a revenue expectation from the large-scale solar business, doesn't allow analysts and investors to completely understand the financial model for the larger projects over the course of the next few years.

"With the German business falling off, a lot of solar modules need to be re-routed to the U.S. and the systems business. But as uncertainty about the feed-in tariff changes in Germany ends, uncertainty about the project development business comes into focus. It's still a source of confusion," the Deutsche Bank analyst said.

Deutsche Bank is at a hold on First Solar shares, arguing that there is little reason to expect a major catalyst for an upward move in the stock on the first quarter earnings.

Collins Stewart analyst Dan Ries also evinced the uncertainty over the First Solar systems business headed into the earnings report on Wednesday in a research note. The Collins Stewart analyst wrote, "Forecasting FSLR's quarterly performance will be more difficult than usual in the next few quarters as the company's project business ramps and causes revenue recognition delays and the company to hold modules in inventory instead of selling them to third-party customers.... FSLR has power purchase agreements for 1,400 MW of projects it is developing. However, it currently has only 192 MW of these systems sold, or roughly 50% of the 370 MW of projects we expect it to build in CY10."

First Solar announced on Wednesday morning that it is acquiring 1.1 gigawatts in a southwestern U.S. project pipeline from NextLight Renewable Power for $285 million in cash, adding to the focus on the systems business.

The deal may also have implications for First Solar competitor SunPower (SPWRA).

The news of the Nextlight acquisition on Wednesday morning added to the total level of projects that First Solar will begin work on in the second half of 2010 -- something that Collins Stewart's Ries had specifically hoped for in his earnings preview piece. However, First Solar bears see the latest deal as a capitulation to the problems inherent in the solar market, as opposed to a sign of smooth transition from the module selling frenzy in Germany to a stable average sales price in the systems market.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FSLR $54.85 0.00%
AAPL $93.64 0.00%
FB $118.57 0.00%
GOOG $698.21 0.00%
TSLA $241.80 0.00%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs