North Coast Solar Stocks

October 29, 2009

First Solar shares plunge on 3Q revenue miss

Filed under: FSLR — Tags: , , , , , — Jason @ 2:57 pm

First Solar shares plunge sharply on 3rd-qtr revenue miss, but analysts remain bullish

2:57 pm EDT, Thursday October 29, 2009

NEW YORK (AP) — Shares of First Solar Inc. (FSLR) tumbled Thursday after the nation’s largest solar panel maker reported third-quarter revenue far below analyst expectations, even though analysts remained bullish on the company.

First Solar shares plunged $22.69, or 15 percent, to $128.89 in afternoon trading. The stock has traded between $85.28 and $207.51 over the past year.

Late Wednesday, the company reported a 55 percent leap in third-quarter earnings on a 38 percent increase in revenue. But sales of $480.9 million missed the average analyst estimate of $528.8 million, as measured by a Thomson Reuters survey.

The company said its Sarnia project in Canada is about 65 percent complete. Although all modules produced during the quarter were shipped, about $58 million in revenue won’t be recognized until the fourth quarter, the company said.

“This is truly a timing issue,” Chairman Mike Ahearn said on a conference call with analysts. “That project has been sold, the contract wasn’t signed until early in the fourth quarter. We remain on track for annual guidance.”

“Don’t sweat the revenue miss,” said John Roy, an analyst with Janney Capital Markets. He reiterated a “Buy” rating and $185 share price target.

“While the lower revenue was a slight disappointment, we do not view it as a cause for concern and believe it will be made up in the fourth quarter,” Roy said in a note to clients. He added that the results do not change his view that First Solar should remain the low-cost industry leader for the foreseeable future and will likely gain share value in large-scale projects.

Lazard Capital Markets analyst Sanjay Shrestha said First Solar’s pressured share price presents an opportunity to buy up shares at a discount. He reiterated a “Buy” rating and $190 price target.

Jefferies & Co. analyst Paul Clegg said First Solar is positioned to generate greater cash flow returns than its peers, and he can hardly imagine a market scenario where that is not the case.

“We believe that First Solar’s cost structure will remain the lowest in the industry even if silicon prices continue to decline,” Clegg said as he maintained his “Hold” rating and $130 price target.

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