First Solar, Inc. (FSLR)’s Higher Share Count Makes Comps Difficult

First Solar, Inc. (FSLR)’s Higher Share Count Makes Comps Difficult

First Solar, Inc. (NASDAQ:FSLR)’s analyst day is coming up on Wednesday, and analysts generally expect the company to remain upbeat about this year. The day could be a key catalyst for the company’s shares, if today’s increase is anything to go by.

What’s expected at First Solar’s analyst day

Deutsch Bank analyst Vishal Shah and his team believe First Solar, Inc. (NASDAQ:FSLR) will guide for some “upbeat” targets for this year through 2016. They said the company continues to reduce costs and push out new projects. Even though the company may have about 1.3 gigawatts in potential yieldco projects in backlog, they don’t expect there to be any kind of self-owned yieldco announcement on Wednesday because First Solar has kept limits on its near-term project completions.

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Between last year’s analyst day and this year’s, the Deutsche Bank team estimates that First Solar, Inc. (NASDAQ:FSLR) has pushed out between 200 and 300 megawatts, between $500 million and $700 million in revenue and about 30 cents to 50 cents per share in earnings. They note that the pull-in of Desert Sunlight will probably impact the company’s near-term profitability prospects. They believe the company will continue to show progress on cutting costs though, which will result in a better margin outlook for delayed projects. They estimate that First Solar will be able to see gross margins of 20% or more this year.

Looking ahead to this year

They don’t think any more than 20 cents to 30 cents per share in earnings will come from third party sales and believe there is upside to consensus estimates for First Solar, Inc. (NASDAQ:FSLR)’s revenue and earnings per share in its 2014 guidance. They report that adjusted targets from the last analyst day suggest guidance of between $2.20 and $3.50 per share in earnings, but they think management’s outlook will be “more constructive.”

The Deutsche Bank team sees almost 1,400 megawatts of captive sold projects shipping this year with between 500 and 600 megawatts of unsold projects, which they say should drive incremental upside.

First Solar rated a Hold

They also note that First Solar, Inc. (NASDAQ:FSLR)’s share count has increased by about 14% since the company’s last analyst day. This means making 2015 earnings per share comparisons will be difficult. However, they believe consensus estimates will trend upward because of the lower expectations. And even though there is a higher earnings per share count, they expect First Solar, Inc. (NASDAQ:FSLR) could update previous targets of between $2.50 and $4 a share to between $3.50 and $4.50 a share this year.

They note also that First Solar, Inc. (NASDAQ:FSLR) has made progress on Tetrasun but has not yet provided much clarity in terms of longer term pipeline conversion. As a result, they expect this to hold back positive reaction from the company’s bullish guidance. They reiterated their Hold rating and $50 per share price target on First Solar.

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