First Solar Outlook Pushes Entire Solar Industry Higher

Maybe solar demand will be far better than we expected in the first half of 2013. That's the thesis today after First Solar (NASDAQ: FSLR  ) released a higher than expected full-year financial target.

At a conference today, First Solar said it expects 2013 sales to be between $3.8 billion and $4.0 billion, with earnings per share of $4.00-$4.50. That's well above the $3.15 billion in sales and $3.46 per share earnings analysts had expected. When the numbers were announced, First Solar's shares shot higher and are up a whopping 48% at the time of this writing. 

Drawing wild conclusions
These numbers are outstanding and they've pushed the entire industry higher today. Yingli Green Energy (NYSE: YGE  ) is up 19% today, Trina Solar has jumped 12%, and LDK Solar (NASDAQOTH: LDKSY  ) is up 26% on hope that this will increase sales. Yingli and LDK, in particular, are two of the most highly leveraged companies in solar -- the market is drawing the conclusion that higher sales at First Solar will be good for both, potentially leading to a profit later this year.

But let's look closer at what First Solar had to say. Of the $3.8 billion-$4.0 billion in sales, $3.6 billion is expected to be in the systems business, a business Yingli, LDK, Trina, and most other Chinese manufacturers have little exposure to, especially outside of China. I don't think we can draw the conclusion that a good year for First Solar will lead to a good quarter for Chinese solar because they have different businesses.

The real good news for First Solar
If you're a First Solar investor then the improved guidance is good, but there's even bigger news on the technology front. The company announced that it's buying TetraSun, a PV start-up which has developed a cell architecture that can generate efficiencies exceeding 21% without the added cost that normally comes with high-efficiency modules. This is a direct shot at Chinese module makers like Yingli, LDK, and Trina Solar who have been able to take share because of low cost structures.  

What these companies don't do well is research new technologies to increase efficiency. That usually falls on equipment makers like GT Advanced Technologies (NASDAQOTH: GTATQ  ) , who provide the equipment to make solar cells. But First Solar will now be boosting its efficiency capabilities, but SunPower (NASDAQ: SPWR  ) is already well ahead with 21.5% efficient modules.

First Solar plans to launch this technology in the second half of 2014 and I'm sure we'll hear more details about it when first-quarter earnings are released.

First Solar changes the game
It appears that First Solar will stick with the low-cost CdTe panels, which also got an efficiency boost today, in the utility-scale business, and use TetraSun to get into commercial and residential solar. First Solar has very little exposure to these two growing markets, which has investors concerned about reliance on giant utility-scale projects.

This is a huge catalyst for First Solar that could drive the stock for the next few years. If you're looking for continuing updates on this breaking news and what it means for the stock, The Motley Fool has created a brand-new report that details every must know side of this stock. To get started, simply click here now.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2485740, ~/Articles/ArticleHandler.aspx, 10/24/2014 3:19:45 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement