Q3 Preview: First Solar (FSLR) Looks to Shine Light on Solar Sector

Shares of First Solar Inc. (NASDAQ: FSLR) are down 44 cents or 0.29 percent to $149.96 in midday market movement on Thursday, ahead of the company's third-quarter results scheduled to be released after the closing bell.

The company is expected by analysts to report third-quarter earnings of $1.95 per share on sales of $778.76 million.

First Solar reported second-quarter earnings of $1.84 per share, 24 cents better than the analyst estimate of $1.60 per share. Third-quarter revenue for the company was $588 million, compared to the Street's view of $542.60 million.

Since the start of the third quarter shares of the company are up $13.02 or 9.50 percent. Year-to-date the stock has risen $14.66 or 10.83 percent.

A valuation shows that First Solar is going for a forward P/E of 20.63x full-year 2010 estimates.

Data from Bloomberg shows that 26 analysts have a Buy rating on First Solar, 15 have Hold and 7 have a Sell. The average analyst price target of $152 with a target range of $100 to $200.

Analyst Comments

Wedbush on Tuesday maintained an Underperform rating on First Solar stock, but raise its price target from $100 to $105.

Wedbush analysts says, "We remain cautious on First Solar shares due to expected margin contraction, pricing pressure, project development risks, and feed-in-tariff changes in 2010. While we acknowledge that industry conditions are strong now ahead of subsidy changes in key markets, we believe oversupply conditions may resume in 2011 pressuring ASPs and margins. As key European markets slow down, we expect the company will continue its shift to developing more projects on its own and assuming project development risks."

Kaufman Bros. has a positive view on the solar industry, maintaining a Buy rating on First Solar.

Kaufman analyst says, "Solar earnings likely to get a kick start from First Solar. We continue to expect a strong earnings season from the solar industry.We increased our solar demand forecasts for 2010 and 2011 several times throughout the year to account for new capacity generation and increased demand. Although capacity has increased, the industry still remains constrained. This has allowed solar companies to maintain or increase pricing, even in the face of declining incentive rates."

Argus maintains a Buy rating on First Solar with a price target of $180, saying that the company is benefiting from the growing push by U.S. utilities toward alternative fuels.

Argus analyst says, "Partly as a result of decisions by utility boards and state-mandated targets, North American utilities are increasingly investing in alternative electricity-generation sources such as wind power and solar photovoltaic (PV). Alone among the major industry players, First Solar has in place a new segment devoted to devising and implementing solutions for U.S. utilities."

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