Citi Gives Color On First Solar Following Earnings Report

Citi loves the flexibility of First Solar's FSLR model and costs appear back on-track, the ~$0.37 raise in 2011 EPS was relatively low quality as it's almost wholly due to lower startup costs and lower taxes. More bigger picture: when a rising tide lifts all boats in the sector, the beauty of this model can be difficult to see but in harder times, this story really shines as it ought to be able to put up a big EPS year on the back of its robust systems pipeline. Positives include: Guidance walked higher despite market uncertainties in Italy and France; big NA pipeline provides a big demand sink in the event of inevitable hiccups in European FIT-driven demand in 2H:11; cost/W reduction back on-track after a hiccup last Q. Negatives Include: Guidance raised, but in large part due to lower startup costs on delays in France; RONA/ROIC continues to compress as increasing amounts of capital are necessary to generate incremental revs; FX assumptions have crept higher creating risk in the event the Euro goes the other way. Citi has a $150 PT and Hold rating on FSLR FSLR closed Thursday at $157.48