As investors gear up for First Solar’s (FSLR) end of July Q2 earnings, Credit Suisse gives three reasons for upside potential: production, currency and efficiency. The bank believes their $330 target is within reach.
Expect upside in Q208:
Once again production and currency should benefit Q2. We suspect Malaysia-1 plant is ramping ahead of plan, and could drive Jun EPS to higher end of 60-65c, above consensus at $217m and $0.58, our print estimates are at $201mm and 56c.
We suspect there can be 10MW+ upside to our ~82MW production estimate in 2Q08. In addition, Euro appreciated ~4.2% q/q, which could drive 5c+ upside to our $2.45 ASP (flat q/q). We are modelling a ~1.5% decline in module cost. We expect ~$7mm in ramp costs in C2Q, and start up cost of $5m (Malaysian pull in could drive this higher, but note above production/ASP assumptions are conservative). FSLR’s efficiency has remained flat for 3 quarters at ~10.5% (incl 1Q08), we suspect efficiency should inflect up in 2Q/3Q08.
Credit Suisse reiterates OUTPERFORM on First Solar (FSLR), target price $330.
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