First Solar Investors Dumping Shares on Weak Guidance

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Thin-film solar PV maker First Solar Inc. (NASDAQ: FSLR) reported fourth quarter and full-year results after markets closed Tuesday. The company posted adjusted diluted earnings per share (EPS) of $0.89 and $768 million in revenues In the same period a year ago, the solar PV maker reported EPS of $0.2.04 on revenue of $1.08 billion. Fourth-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.99 and $898.25 million in revenue.

For the full year First Solar posted EPS of $4.35 on revenues of $3.31 billion compared with EPS of $4.90 and revenues of $3.37 billion in 2012. The consensus estimates called for EPS of $4.41 on revenues of $3.51 billion.

Quarterly revenues were sequentially lower due to the timing of revenue recognition for the company’s Desert Sunlight project, which boosted third quarter earnings to more than double consensus estimates.

First Solar guided first quarter 2014 revenues to sales of $800 to $900 million, compared with a consensus estimate of $898.25 million. First quarter EPS is pegged at $0.50 to $0.60, far below the consensus estimate of $0.84. That will be a huge disappointment for investors.

The company will undoubtedly get questions on its EPS forecast during the conference call, but the company tried to put a good face on the guidance by talking about a record-setting cell efficiency of 20.4% and a drop in average manufacturing costs for $0.64 per watt in the fourth quarter a year ago to $0.53 in 2013.

Shares rose more than 8% in after-hours trading on Thursday and are up about 17% in late morning trading on Friday at $58.76 after posting a new 52-week high of $59.19. The 52-week low is $22.20 and the consensus analyst price target was around $42.00 before yesterday’s report.

The company’s CEO said:

The fourth quarter and full-year 2013 shows our Company’s continued progress in achieving the strategic objectives we outlined during our Analyst Day event in April. … As we move into 2014 the company remains focused on continuing to achieve our strategic objectives to ensure future success.

He’ll have to do better than that on the conference call.

Shares are down more than 10% in after-hours trading at $52.06 in a 52-week range of $24.46 to $65.99. Thomson Reuters had a consensus analyst price target of around $45.40 before today’s report.

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