First Solar, Inc. (FSLR) A Good Buy Ahead Of Q1 Results

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First Solar, Inc. (NASDAQ:FSLR) is expected to report an uneventful first quarter report, “given FSLR’s recent Analyst Day,” says a report from Baird Equity Research, on May 1, 2014 by analysts Ben Kallo and Tyler Frank. However, the analysts believe that new projects and developments in the C&I sector to be positive for the solar company.


Robust balance sheet

Analysts expect revenue of $856.7 million, non-GAAP net income of $53.5 million and non-GAAP earnings per share of 53 cents, compared to consensus estimates of $837 million, $53.2 million and earnings per share of 52 cents, respectively. First Solar, Inc. (NASDAQ:FSLR) has guided for first quarter sales in the range of $800 million to $900 million and non-GAAP earnings per share of between 50 cents and 60 cents.

According to Baird analysts, the company will benefit from developments in the rooftop / C&I business, but little new information is expected, given the company’s recent analyst day. First Solar stated at its analyst day that it has 45MW of C&I opportunities and had been shortlisted for 15MW of projects. Development in the C&I marketplace would be a positive as First Solar, Inc. (NASDAQ:FSLR) is expected to diversify its customer base.

Analysts note that the company has one of the most stable balance sheets in the solar industry with a debt to equity ratio of 5% and cash and marketable securities of $1.76 billion in the fourth quarter of 2013. First Solar, Inc. (NASDAQ:FSLR) will be able to impress with the help of its strong balance sheet compared to its competitors, which would help the company get new business.

First Solar still dominates solar industry

Management at First Solar, Inc. (NASDAQ:FSLR) will analyze the financing costs and overall impact that yieldco would have on its business. Analysts believe that First Solar is well positioned to launch a yieldco given its strong balance sheet, which will help it to acquire projects under development, expand its pipeline and hold projects before dropping them into a yieldco.

First Solar, Inc. (NASDAQ:FSLR) is still dominating the solar industry, when it comes to cost, though poly prices declined abruptly. The company targets a core cost per watt of less than 37 cents by 2017 by improving its manufacturing, which “should allow it to continue to meaningfully outpace the C-Si competition,” as poly prices are expected to stabilize at current levels, which could make cost cutting for the C-Si module difficult, believe the analysts.

Overall, analysts believe First Solar is well positioned for long-term growth backed by a robust balance sheet, international expansion, cost-saving measures and technology growth. “We would be buyers ahead of Q1 results,” say the Baird analysts.

They have an Outperform rating on First Solar, Inc. (NASDAQ:FSLR) with a price target of $87.

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