Pros At Odds Over First Solar

First Solar, Inc. FSLR is scheduled to report its second-quarter results after Tuesday's market close. The Estimize community (based on 16 estimates) is expecting the company to earn $0.42 per share on revenue of $765.40 million. The Wall Street consensus estimate is also looking for an earnings per share of $0.42 but on revenue of $746.27 million.

RBC Turns Bearish In May

Mahesh Sanganeria of RBC Capital Markets downgraded shares of First Solar in late May to Underperform from Sector Perform with a price target slashed to $34 from a previous $54.

According to Sanganeria, First Solar's earnings power is actually "significantly" lower than the Street's estimates. The analyst argued that in the past, First Solar was able to secure large utility-scaled project contracts with lower efficiency Cadmium Telluride (CdTe) due to its lower cost versus Crystalline Silicon. First Solar's cost advantage was "extremely evident" when polysilicon prices rose above $200/kg, but declining polysilicon prices and manufacturing efficiency has resulted in some competitors lowering their cost per watt from more than $1/watt to lower than $0.50/watt by the end of 2014.

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In fact, Sanganeria pointed out that Trina Solar Limited (ADR) TSL announced its in-house manufacturing cost reached $0.42/watt versus First Solar's reported core manufacturing cost per watt of $0.47 in its fourth quarter conference call (the last time the company provided its cost per watt to the investment community), implying its cost advantage is eroding.

The analyst also pointed out that First Solar has missed its annual revenue guidance every year since 2011 when its revenue fell $34 million short of the low-end of its guidance. The miss has grown since then, culminating in a $210 million shortfall in 2014.

JPMorgan: Buy The Dip

Paul Coster of JPMorgan maintained an Overweight rating on shares of First Solar with an unchanged $68 price target.

According to Coster, First Solar is likely to reinstate its fiscal 2015 guidance which was suspended when the company announced its intentions to form a YieldCo. As such, investors will be focusing more on the company's guidance and outlook as well as management's commentary.

Coster is expecting the company to report an earnings per share of $0.51 on revenue of $812 million and earn $1.74 per share in the full year on revenue of $3.191 billion.

The analyst also noted that First Solar announced on June 15 it had achieved a record 18.2 percent full area conversion efficiency for its CdTe module. The announcement provides "confidence" that the company is tracking its efficiency improvement targets.

Finally, Coster suggested that shares are trading at a 36 percent discount to his sum-of-the-parts model. As such, First Solar is a long-term growth stock and a "unique" pure-play on the growth in global solar capacity.