First Solar, Inc. (Nasdaq: FSLR) reported that although revenues were slightly lower than expected for the quarter, earnings per share (EPS) were higher.
The company raised 2011 EPS guidance due to improvements in cost per watt (down 3% over the previous quarter) and a strong order pipeline. Manufacturing efficiency improvements were responsible for the lower cost per watt.
Given current strong demand, FSLR can allocate more product to its higher margin component business, which supports higher earnings guidance.
Analysts at Ardour Capital believes First Solar is best positioned to realize near term cost reductions as peers face cost pressure.
Revenue for Q410 was $610 million, slightly under the forecasted $650 million, but margins were 48.6%, compared to estimate sof 46.1%, due to cost improvements. Earnings per share (EPS) were $1.80 versus Ardour’s estimate of $1.76.
2011 EPS guidance was lifted to $9.25-$9.75 on strong demand in its higher margin component segment.
Production capacity should hit 3.3 GW in 2012. Conversion efficiency stands at 11.6%, up from 11.3% in 3Q10 and should further improve this year.
FSLR sold 400 MW in projects in the last quarter, boosting its North American pipeline to 2.4 GW. FSLR plans to use its North American pipeline as a hedge against demand fluctuations and European feed-in cuts expected in the second quarter of 2011.
First Solar shares have gained 27% so far this year, although nearly 18% of its outstanding stock was held in a short position as of January 31.
Ardour Capital raised its price target from $180 to $190, with a "buy" rating.
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