Ahead of the Bell: First Solar edges higher

AP News
Posted: Dec 17, 2009 8:43 AM

Shares of First Solar Inc. edged higher in premarket activity Thursday after the nation's largest solar panel maker predicted 2010 sales above analyst estimates, and said it would expand production at its Malaysia plant.

The Tempe, Ariz., company on Wednesday projected sales between $2.7 billion to $2.9 billion for 2010, up from estimated 2009 sales between $1.98 billion to $2.03 billion. The company forecast per-share profit in a range from $6.05 to $6.85.

On average, analysts surveyed by Thomson Reuters expect First Solar to post 2009 revenue of $2 billion and 2010 sales of $2.4 billion. They expect profit of $6.55 per share in 2010.

Jefferies & Co. analyst Paul Clegg said First Solar's outlook was "realistic, but cautious...it makes sense to focus more on the upper end of the guidance range."

But another analyst cautioned that the company's expansion in a "somewhat uncertain demand environment" is weighing on margins.

"Gross margins as the systems business ramps are falling to below 40 percent from above 50 percent last year," said Canaccord Adams analyst Jonathan Dorsheimer in a note to investors. He maintained his "Hold" rating but boosted his price target by $15 to $130.

First Solar said it would spend $365 million to expand its Malaysia plant. First Solar said its capacity will increase 48 percent from current levels as it adds 10 production lines in Malaysia and France during 2010 and 2011. It had previously announced the French factory expansion.

In premarket trading, shares rose $2.26 to $139.