Hapoalim Securities Gives Earnings Preview On First Solar

Ahead of First Solar'sFSLR 1Q11 earnings report, scheduled for after the close on Tuesday, May 3, Hapoalim Securities is lowering its 1Q11 estimates to reflect an industry‐wide slowdown amidst a harsh winter in Germany and regulatory dislocations in Italy in March and a shift in timing of systems shipments to 2H11. Hapoalim foresees formidable risk to First Solar's earnings outlook in 2H11 given the clouds gathering on the horizon. With abrupt policy changes dislocating demand in Italy and France, a slowdown in German demand which likely needs further module ASP declines to overcome, an industry‐wide inventory build that may require a couple quarters to absorb, and a mounting supply/demand imbalance in 2H11, Hapoalim expects the solar industry to rapidly transform into a buyer's market with industry pricing coming under pressure. With First Solar's stock having declined 15% since the start of April, Hapoalim believes a “relief rally” could follow an in‐ line 1Q11 report. However, it expects the stock to come under renewed pressure in 2H11. Hapoalim has a $120 PT and Sell rating on FSLR FSLR closed Tuesday at $136.49