Is MEMC Electronic Materials (NYSE: WFR) headed for a big year, or is the company managed by a bunch of starry-eyed optimists?

The silicon wafer manufacturer missed analyst targets rather badly in last night's fourth-quarter report, falling 5.6% short of the average revenue target and more than 26% below the earnings-per-share consensus.

On the other hand, management is aiming far ahead of analyst targets for the coming year. The midpoint of management's 2011 guidance falls 34% ahead of the analyst consensus in terms of sales and 15% higher on the bottom line. This, my friends, explains how the stock can jump more than 11% despite missing this quarter's targets.

MEMC bases this rosy forecast on semiconductor wafer sales in line with the overall industry's growth, 20% higher solar wafer sales, and installed megawatts of SunEdison solar panels at double the 2010 level. Most of the gains should come in the second half of the year.

Acknowledging that some or all of these assumptions could be way off base, CFO Mark Murphy nevertheless said the guidance is reasonable because the company has contingency plans in case any of the end markets fail to show up.

The market is reading MEMC's signals as generally positive for the solar industry. SunPower (Nasdaq: SPWRA) (Nasdaq: SPWRB), Trina Solar (NYSE: TSL), and First Solar (Nasdaq: FSLR) are up more than 5% on the news and many more solar stocks are following suit to a lesser degree.

If MEMC's projections and assumptions are sound, solar could be hot again after a couple of years of botherations and market skepticism. Do you buy it, or is MEMC building castles in the sky? Discuss in the comments section below.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. First Solar is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.