Collins Stewart Upgrades First Solar (FSLR) to Buy; $320 PT

Collins Stewart upgrades First Solar (Nasdaq: FSLR) from Hold to Buy and establishes a $320 price target.

Following a meet with First Solar management, the firm has become more positive on the stock as management, as well as several key customers, have indicated "the construction of its new Malaysian production facilities is progressing well" and First Solar's "opportunity to sell solar systems to utilities has improved, in both the US and Europe, as utilities appears to be warming to PV."

Collins Stewart believes First Solar's low production costs still remain the key to its success. Specifically, with production costs now moving toward $1/watt, the firm believes these costs could go below this level next year due to "efficiency and production throughput improvements, and it opening facilities in low-cost Malaysia."

The firm raised its FY08 and FY09 PF EPS estimates on First Solar from $3.53 and $7.04 to $3.65 and $7.24, respectively. The Street is currently estimating FY08 EPS of $2.96 and FY09 EPS of $5.82.

Collins Stewart said its $320 price target on First Solar is based on 32x its pro-forma CY10 EPS estimate of $9.93. With shares of First Solar trading up about $6 to $272, today, the firm's price target represents a potential return of 17.6%.

First Solar, Inc. designs, manufactures, and sells solar electric power modules using a proprietary thin film semiconductor technology.

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