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Tuesday, April 9, 2013

First Solar, Inc. (FSLR)

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Good Afternoon! And a very good afternoon it is for First Solar
    You may recall I initially mention FSLR back in January and then again on their Q4 2012 earnings report at the end of February. I like solar and I like this company a lot. FSLR has been capitalizing on the reduction in PV cell costs by becoming a fully integrated solar electric utility. That seems to be paying off.

    Today the company gave guidance for fiscal years 2013, 2014 and 2015. For 2013 FSLR expects net sales of $3.8 to $4.0 billion, gross margins of 20 to 22% and diluted EPS of $4.00 to $4.50. The company's revenue targets for 2014 and 2015 are for $3.5 to $4.0 billion and $4.2 to $4.8 billion respectively. EPS targets for 2014 and 2015 are $2.50-$4.00 and $4.00-$6.00 respectively. The company is targeting operating cash flow of $600 million to $1 billion for 2015.
    The company also announced this morning that it has set a new world record for cadmium-telluride PV module efficiency. This new efficiency is leading to a massive reduction in production costs on a per watt basis. The company is already pushing the envelope when it comes to energy production costs with its Campo Verde, CA project. This project is expected to produce electricity with a cost per kWh comparable to that of coal fired power plants.
    Based on 2015 cash flow projections projections the company's cash flow ROE should be between 15 and 25%. Its earnings based ROE should begin to approach 15%. Given the company's technological leadership, a vertically integrated business plan that is quickly proving itself sound, and fabulous growth visibility I see no reason why the shares can't eventually trade at 15x expected 2015 earnings numbers. That gets us a share price of at least $60.


Best Regards,

Josh