FSLR continues to remain our high conviction idea into Q2 earnings as we expect significant upside to street estimates from better than expected output in Malaysia, gross margin expansion and positive currency impact. We believe concerns over potential margin pressure and increased competition are unwarranted. Raise PT to $335.
Lehman sees margain expansion, not margin compression:
2009 should be a year of margin expansion as we expect costs to decline at a significantly faster rate than ASP declines. We believe street estimates do not assume margin expansion in 2009 and could prove to be conservative even if FSLR ships substantial output in the US utility market.
Spain and US To The Rescue:
In the near term, we expect Q2 upside, Spain share gains and potential US utility contract win to drive share price performance.
Lehman maintains OVERWEIGHT on First Solar (FSLR), target price from $280 to $335.
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