Despite the drop in oil prices and despite a bear market in general, it is still easy to find those who think some alternative energy stocks are headed much higher.  That is still the case for shares of First Solar, Inc. (NASDAQ: FSLR). This morning we have seen a note out of Lazard Capital Market’s analyst Sanjay Shrestha still calling for this as a "Buy" ahead of tomorrow’s earnings from the solar technology leader.  As you look on you’ll see that this upside target with an implied 30% gain/goal is actually more conservative than some other more impacting calls out there and his target went up only after last earnings.

Shrestha’s call here looks past the near-term cost ramps with a focusremaining on the long-term prospects for the company.  First Solarreports earnings after the close on Wednesday and Lazard’s model putsFirst Solar’s revenues at $210M, with some 48% gross margins and $0.48EPS.  Consensus estimates are $216.9M, 49%, and $0.58 respectively.

The company already noted that this report will have slow growth asmost orders are in the second half of the year.  First Solar’s priorguidance was as follows:

• 420MW to 460MW of shipments,
• $975M to $1.05B in revenues,
• $36M to $39M in plant start-up costs,
• $50M to $52M stock-based compensation,
• GAAP operating margin of 25% to 30% with a 28% to 30% tax rate,
• 83M to 84M fully diluted shares outstanding,
• and $500 million in capex.

Shrestha noted that gross margin is expected to be down sequentiallydue to the ramp of Malaysia, as prior start-up expenses will bereclassified to cost of goods sold in 2Q08. He also expects thatforeign currency effects should keep average sales prices flat toslightly up on a sequential basis.

Lazard’s official price target of $350.00 reflects a 40-times 2010estimates earnings of $10.00 EPS with a modeled discounted of 15% forone year. The note also calls First Solar a core holding for the sector.

Despite a serious drop in oil today, First Solar shares are up nearly1% at $269.00 in mid-day trading.  Its 52-week tradingh range $74.77 to$317.00.  If you want to know how Lazard ranks in there for pricetargets, we show an average price target of around $335.00 or $336.00.Unless this has changed, there are even $450.00 price targets out therefrom AmTech and Citigroup.

• Jim Cramer named this as an Obama pick if he wins.
• Basic solar call from Citigroup here.

JON C. OGG
JULY 29, 2008

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