First Solar, Inc. (NASDAQ:FSLR) shares skyrocketed in Tuesday afternoon trading after the company released its guidance for 2013. The stock jumped more than 40 percent initially before settling slightly.

At the time of this writing, the stock was up 39 percent on the price at opening bell. According to Marketwatch, trading on the stock was halted briefly this afternoon because of how quickly the price rose.

First Solar

We added the stock to our Stocks to Watch List for February 27 because of its fourth quarter profits. At that time, First Solar Inc. (NASDAQ:FSLR)’s guidance for the quarter was weaker, which sent the stock into a downward spiral. It has been a popular short position lately.

However, today is a completely different story. The company’s 2013 guidance was extremely optimistic. It projected full-year diluted earnings of $4 to $4.50 per share and $3.8 to $4 billion in net sales for the year. The company also predicted $430 to $460 million in operating income.

FactSet indicates that consensus for First Solar, Inc. (NASDAQ:FSLR)’s full-year earnings per share to be at $3.60 with sales of approximately $3.17 billion.

Bloomberg covered the solar panel company’s analyst day today and reports that First Solar raised its guidance for the year because it’s beginning to see improvements in efficiency accelerating, which should cut down on production costs and enable the company to compete more closely with competitors using polysilicon.

The company said its newest panels are able to turn 16.1 percent of the sun’s energy which hits them into electricity, which is a new record for cadmium-telluride technology. First Solar’s CTO said the company may be able to push the conversion rate of its solar panels up to 18 percent by 2016. He said if they can do it, they will be able to push production costs down to less than 40 cents per watt by 2017, compared to 68 cents per watt currently.

The U.S. Energy Department confirmed the new efficiency record set by First Solar, Inc. (NASDAQ:FSLR)’s latest solar panels, which are not yet in commercial production.