First Solar Rises as Profits Swell on Shift to Projects

First Solar Inc. (FSLR), the world’s biggest maker of thin-film panels, rose the most in seven weeks after second-quarter earnings rose 81 percent.

First Solar gained 21 percent to $17.93 at the close in New York, the most since June 12. That trimmed its loss for the year to 47 percent.

First Solar’s profit jumped after making a strategic shift toward building solar farms with its modules. Net income was $111 million, or $1.27 a share, compared with $61.1 million, or 70 cents, a year earlier, the Tempe, Arizona-based company said in a statement yesterday.

Excluding restructuring charges, earnings were $1.65 a share, 71 cents more than the average of 27 analysts’ estimates compiled by Bloomberg. Sales climbed 80 percent to $957.3 million, largely from selling utility-scale power projects to companies such as Exelon Corp. (EXC) and Enbridge Inc. (ENB)

The company also announced plans to build a new project in California, the 139-megawatt Campo Verde solar farm, which will sell power to Sempra Energy (SRE)’s San Diego Gas & Electric under a 20-year contract.

For the year, First Solar raised its earnings forecast by 20 cents, to a range of $4.20 to $4.70 a share, excluding restructuring charges, from a May 3 estimate of $4 to $4.50 a share.

Four Upgrades

Analysts at four companies upgraded First Solar today, including Robert W. Baird & Co., Cantor Fitzgerald and EVA Dimensions, which all recommend that investors buy the shares, according to data compiled by Bloomberg. ThinkEquity LLC’s rating was raised to hold. The average 12-month price target increased to $21.07 from $20.84 yesterday, the average of 35 estimates.

Four analysts rate the shares a sell, including Aaron Chew, at Maxim Group LLC in New York, who has a 12-month target price of $9. While the company raised its 2012 earnings forecast by 20 cents a share, he wrote in a research note today that this figure “backed out all restructuring expenses in their non-GAAP calculation but none of the one-time gains and benefits.”

Those expenses will add up to about 70 cents a share, meaning that the company’s “guidance was quietly cut by 50 cents, suggesting a deteriorating outlook,” he estimated. “Analysts are just dying to have a buy so they can jump on the positive headlines.”

To contact the reporter on this story: Justin Doom in New York at jdoom1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.