First Solar, Inc. (NASDAQ:FSLR) is scheduled to release its fiscal third-quarter results on Thursday, Nov.6 after the market closes. Analysts polled by FactSet expect the company to report $1.05 billion in revenue, down 17.10% from the same period last year. Earnings are expected to come in at 64 cents. UBS analyst Stephen Chin calls for 57 cents in EPS.

First Solar

First Solar’s retained projects have $93 million in CAFD

For the full-year 2014, the utility-scale solar installer has guided revenue between $3.7 billion and $4 billion. First Solar forecasts earnings of $2.40-$2.80 with 18%-19% in gross margins. UBS said in a research note that the Tempe, Arizona-based company will likely hold off on its final YieldCo decision until early next year.

Mr Chin believes that there could be an opportunity to test whether First Solar can “extract competitive value” by directly selling projects. Of course, a well-executed YieldCo would add value to the stock. But the solar market’s competitiveness may pose challenges to long-term execution. The research firm estimates that there is about $93 million of cash available for distribution (CAFD) in retained projects. Of that, $61 million is expected in 2015 and $32 million in 2016.

First Solar CAFD

UBS also expects $6-$8 million in CAFD from the company’s 45MW plant in India. Put together, it’s close to the minimum threshold to bring a YieldCo to the market. As of June 2014, the company had 1.4GW in the project backlog with unsold equity. However, the company recently sold 150MW plant to Souther Power. It brings the total retained backlog to 1.25GW.

What if First Solar doesn’t pursue YieldCo?

Goldman Sachs analyst Brian Lee believes that First Solar is unlikely to pursue a YieldCo until mid-2015. In case the company doesn’t go ahead with the YieldCo, UBS still sees a lot of value in its retained projects. As of August 5, 2014, First Solar’s project backlog stood at 1.6GW.  Assuming an average installed cost of $1.70/watt, it would require capital expenditure of $2.7 billion. UBS estimates the enterprise value of $3.6 billion.

That means if First Solar were to sell its projects it would have a gross margin of ($3.6 billion – $2.7 billion) $900 million. That’s a 25% gross margin. UBS has a Neutral rating on the stock with $70 price target.