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.
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.”
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