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Gold/Mining/Energy : First Solar, Nasdaq: FSLR -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (170)	2/19/2008 9:19:54 AM
From: Dennis Roth	Read Replies (2) \| Respond to of 912

First Solar, Inc. (FSLR): Execution continues with a strong finish to 2007; maintain Buy - Goldman Sachs - February 19, 2008 What's changed Key takeaways from First Solar’s 4Q2007 report were: (1) EPS of $0.77 came in well ahead of both our and consensus expectations of $0.48 and $0.53 respectively, driven by better than expected revenues and margins. (2) Company guided to $900-$950 mn in revenues for 2008, better than our estimate of 800mm. (3) Management disclosed that production costs per watt decreased to $1.12/watt in the quarter from $1.19/watt last quarter. Implications First Solar continues to impress with another above-expectation quarter and progress towards their grid parity goal of a manufacturing cost of $0.70/watt by 2010-2012. We maintain our Buy rating given the company’s (1) strong execution thus far, (2) industry-leading cost/watt manufacturing ability, (3) entrance into the US market being a potential positive near-term catalyst. We are updating our FY2008-FY2010 EPS estimates to $2.78, $5.08, $8.20 from $2.05, $4.76, $6.06. Changes from prior forecasts are due to the incorporation of the latest quarter’s reported information and our view that revenue will ramp harder than previously expected. Valuation We are raising our six-month price target to $275 from $250 due to our updated forecasts and our assignment of 2.0X PEG multiple vs. 1.75X before—something we feel is justified given the company’s execution thus far. Our primary valuation metric is a PEG multiple on 2010 earnings; we also take into account P/E on out-year and DCF analysis. Given our view that strong secular demand and growing earnings will overshadow the cyclical oversupply risk, we continue to believe that 1H2008 will be strong for fundamentals and valuation. Key risks (1) Execution problems during ramp. (2) Problems in driving costs lower. (3) Industry oversupply hits harder/sooner than expected. (4) Oil pricing falling dramatically. (5) Negative government policy/ incentive changes.