NEW YORK ( TheStreet) -- First Solar ( FSLR) shares are selling off on Friday, down by more than 4%. The U.S. solar company's revenue came in light for the fourth quarter and the company lowered its high-end revenue guidance for 2011.

First Solar shares were recently trading at $156. First Solar shares had rallied as high as $175 earlier this month, as the price of oil spiked, and as expectations that Italy might cut support for solar in the first half of 2011 were pushed back to the second half of the year, or even 2012.

Even at $156, First Solar shares are trading at a hefty premium to the rest of the solar sector, at roughly 17 times earnings. The selloff in First Solar shares post-earnings has been a typical reaction for the stock. Analysts in the solar sector noted that it's been a trend for First Solar shares to rise ahead of earnings and sell off on the news. The selloff in shares on Friday was moderate as compared to First Solar earnings sell-offs in previous quarter, too.

"We are not surprised to see the stock trade off a few points ... as we believe investors will be a bit concerned regarding management's commentary on a more backend loaded year because on US/Canada systems timing and a lack of visibility in W.Europe on FIT uncertainty in Germany, Italy and France," noted Stifel analyst Jeff Osbourne.

The First Solar earnings was consistent with the outlook from other solar companies reporting earlier in the season, with a slight modification. First Solar said the first half of 2011 will be strong, yet the second half of the year could be a tighter economy based on feed-in tariff changes in Europe. SunPower ( SPWRA) said in its earnings that there would be no changes in Italy until 2012. The Street view, too, has migrated to the thesis that Italy will move more slowly to reduce solar support and it's more likely to be a 2012 event.

In any event, Italy is expected to announce its plans for solar subsidy changes by the first week of March, which will be an important date for solar stocks.

In terms of the specific numbers presented by First Solar and its 2011 outlook, here are some important pros and cons:
  • Another back-end loaded year for a stock already trading at a premium.
  • As Jeff Bencik, analyst at Kaufman Brothers noted in a First Solar earnings wrap, "Importantly, the guidance is back-end loaded for the year and we do not foresee any likely catalysts until 2H11 when the majority of the 290MW Agua Caliente project revenues should be recognized. Currently in an expansion phase, FSLR plans to ramp several new production facilities, expecting to come on line in 2011.... Although the ramp of additional manufacturing lines will significantly increase capacity in 2011, the benefit is back-end loaded, which will likely increase uncertainty for investors. "

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