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First Solar, Inc. Message Board

  • stevenschas stevenschas Jul 13, 2007 3:44 PM Flag

    Argus downgrades

    Argus Rating: SELL
    � We are lowering our near-term rating on First Solar Inc. to SELL from HOLD based on valuation.
    � FSLR shares have climbed more than 30% in July alone and recently traded near $120, implying a
    projected current-year P/E of more than 230.
    � Our valuation analysis now suggests a fundamental trading range of $62-$77 per share. Even
    applying a significant premium for technology improvements and increased industry subsidies, the
    top end of our valuation range extends to just $88 per share.
    � First Solar's operational improvements have been running ahead of schedule, and industry conditions
    have improved markedly in recent months as interest in alternative energy investments has
    skyrocketed.
    � On July 9, First Solar announced that it had entered into five new long-term supply contracts for the
    manufacture and sale of 685 megawatts of solar modules. The agreements are valued at a total of
    $1.2 billion and run through 2012.
    � Our EPS estimates remain $0.52 for 2007 and $1.07 for 2008.
    � Our financial strength rating on the company is Medium, the midpoint on our five-point scale.
    Analysis by Kevin Calabrese, 7/12/07
    INVESTMENT THESIS
    We are lowering our near-term rating on First Solar Inc. (NGM: FSLR) to SELL from
    HOLD based on valuation.
    Over the last several quarters, demand for low-cost modules has risen rapidly due both
    to increased industry subsidies and a shortage of traditional silicon modules. As a result,
    FSLR's business has grown more quickly than expected. Nevertheless, we expect the costs
    associated with this growth to severely impact margins - and profits - in the near term.

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FSLR
37.53+0.49(+1.32%)Aug 26 4:00 PMEDT