Wedbush is downgrading First Solar (FSLR) this morning from Outperform to Neutral and cutting the price target from $170 to $120.

Hat tip to StreetInsider.com for the following analyst comment:

“We are downgrading First Solar to Neutral based on declining margin profile. Revenue falls short of consensus by $48 million due to the delayed revenue recognition for the Sarnia project. Significant manufacturing capacity expansion is not expected until at least 2011. We believe the modest capacity increase, contracting margins and declining ASPs will likely result in modest revenue growth and lower EPS in 2010. Modifications to the German feed-in-tariff in 2010 could impact ASPs and timing of revenue…Adjusting our 2009 and 2010 revenue/GAAP EPS estimates to $1.976 billion/$7.25 from $2.125 billion/$7.84 and to $2.088 billion/$5.43 from $2.464 billion/$7.69.”

Shares are dropping back below $130 following the downgrade in premarket trading.