Earnings Eclipse at First Solar (FSLR)

First Solar, Inc. (NASDAQ: FSLR) is going to have a little bit for bulls and bears alike in its latest earnings report.  The leader in solar panels beat earnings at $1.80 EPS versus Thomson Reuters estimates of $1.77 EPS, but the revenues were a tad light on a 5% drop to $610 million versus estimates of $648 million.

The company attributed the soft revenue figure due to timing of system sales and early implementation of 2011 pricing.  In short, it likely began honoring discounts  sooner than expected.  While this was offset by an increase in volume, this underscores the notion that solar prices are falling.

As far as the 2011 profit guidance,  that was raised to a range of $9.25 to $9.75 EPS from its prior forecast of $8.75 to $9.50 EPS.  Revenue guidance was trimmed from the highs to $3.7 billion to $3.8 billion in annual revenue versus a December forecast for revenues to be $3.7 billion to $3.9 billion for 2011.  The company reiterated a $1.0 billion to $1.1 billion cap-ex budget and sees operating cash flow of $1.0 billion to $1.1 billion.

While good demand visibility is present for 2011 from a broader geographic client base, First Solar shares were already pricing in the  good news.  The stock had closed out 2010 at $130.14 and shares closed today at $164.68.  It was of little surprise to see shares down as much as 6.6% at $157.10 in the after-hours session on Thursday as a sell-the-news mentality was taking hold.

For whatever it is worth, First Solar is still above the consensus analyst price target of $157.22 from Thomson Reuters.

JON C. OGG