First Solar (FSLR): Caution On Financing, 2009 Threatened

Shares of First Solar (FSLR) are down almost two-thirds from their highs. Given how fast the economy and the energy market are changing, tonight’s actual earnings are a big lagging indicator. The street is looking for $1.01 in earnings and $339.3 million in revenue, but the only thing that will matter is guidance. How will the credit environment affect solar financing? How will currency shifts affect margins?

In a new report, AmTech analyst Colin Rusch and John Hardy acknowledge the challenges facing the industry — tightened credit, reduced appetite for new energy investments — believe that as money starts to flow again, the solar sector should be one of the best poised for a rebound. They also expect commodities to surge again over the long-term if the recession means under-ivnestment in this area.

As for First Solar, AmTech’s top line numbers are lighter than the Street’s current 2009 estimates. They see revenue of $1.84 billion vs. current consensus of $2.12 billion. On EPS, however, they’re calling for $6.78 per share, vs. $6.71.

Some points to listen for tonight include:

  • Worst case scenario for Q4 would be an EPS hit from currency of $.07-$.10 per share.
  • The company is expected to announce an accelerated production ramp in Malaysia, in itself a currency hedge.

On the subject of solar financing: “Going back to our project financing sensitivity analysis from October 10, a 100 bps increase in financing translates to roughly a 6-10% system ASP decline to maintain the same ROE on a given project. Therefore, the ~74 bp improvement we have seen in the last couple of weeks could mean the preservation of ~592 bps in margin throughout the value chain. Should rates continue to improve and spreads normalize we could see further preservation”

See also:

Duke Scales Back Solar Investment

Alt Energy Stocks Crushed As Oil Bubble Pops

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