Auriga Reiterates Buy On First Solar (FSLR), Raises PT To $175

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09:02:21 am on July 30, 2010

Auriga remains quite bullish on First Solar (FSLR) following last night’s earnings report, reiterating their Buy rating and raising the price target to $175.  The firm believes it’s separating itself from the competition by continuing to drive costs lower.  During the quarter, manufacturing costs declined by 6% over the previous quarter and 13% year over year.  While they indicate some negatives on the conference call, overall Auriga believes the positives far outweigh the negatives.  They detail each of those…

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– Decreasing manufacturing costs was a surprise because FSLR had been unable to do that for much of the past year
– Line throughput increased to 59MW increasing capacity much sooner than originally thought
– Module efficiency increased to 11.2% and expected to avg 12% next year
– FS Series 3 modules launched which reduces voltage and allows for 30% more modules/string


– Manufacturing defect charge to cost $27 million, but minor issue considering it’s already factored into EPS guidance.  Installers not seeing any ongoing issues and Auriga says brand not effected
– Guidance was mixed: FSLR more profitable on less revenue, but investors likely to focus on the $100 million cut to EPC revenue forecast.  Management’s somber tone did little to excite investors

Looks like traders are focusing on the negatives this morning with the stock down about 4%.  The key support level for FSLR now is in the 120 – 125 range.  It needs to hold that level or another test of the $100 becomes more likely.

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