Thursday, February 18, 2010

First Solar: Brigantine Upgrades Ahead Of Earnings (FSLR) Options 'Max Pain' at $120

UPDATE: "First Solar Reports Utility-type Earnings Growth, Stock Drops (FSLR)"
Original post:
Earnings at 4:30 EST. Here are the analyst comments we've seen since yesterday's "FBR Research Maintains an 'Underperform'" and "Piper Jaffray Reiterates an 'Overweight'" on First Solar (FSLR)". The stock is trading up $1.44 at $125.66.

Remember, the company has a two year string of earnings beats that have fed into the "buy on mystery, sell on history" price pattern for the stock. With options expiring tomorrow the maximum pain is at the $120 strike price.*

First up, the headline story from Tech Trader Daily:

Brigantine Advisors analyst Ramesh Misra upped his rating on First Solar (FSLR) to Buy from Hold ahead of the company’s Q4 earnings report, due today after the close. The Street is looking for revenue of $580 million and $1.50 a share; he’s expecting $591 million and $1.52.

“News out of the solar sector has generally been negative over the last few months: a mostly inconclusive climate summit in Copenhagen, delays in the passage of the Climate Bill in the U.S., concerted resistance towards the adoption of carbon limits, higher than expected reduction in German feed-in-tariffs and lower than expected economic growth in Europe and Germany,” he writes. (Isn’t Germany part of Europe, BTW?) “The primary consequence of this is that expectations for growth in the solar sector have moderated to more realistic levels, coupled with a pull back in FSLR’s stock.”>>>MORE

From SmallCapPulse:

Cowen’s Stone Cautious on First Solar (Nasdaq:FSLR) in Near Term - Maintains OUTPERFORM

December 16, 2009 – Analyst Comments – Cowen’s Rob Stone said he is short-term cautious, but potentially long-term bullish (with a question mark) on First Solar (Nasdaq:FSLR) this morning, ahead of its analyst day. He rates the stock at OUTPERFORM, “vast potential in U.S. and China utility scale markets, scale and low cost” providing 40%+ upside potential vs. the market in 12 months.

Key Takeaways

· Expects company guidance to ‘bracket the Street’. Stone’s model is 16% higher on 2010EPS and 5% higher on revenue....MORE

From StreetInsider:

Broadpoint.AmTech maintains a 'Buy' on First Solar, Inc. (Nasdaq: FSLR), price target $165.

Broadpoint analyst says, "FSLR is scheduled to report 4Q09 results on Thursday, after the market close. We anticipate healthy results and maintenance of 2010 guidance. We forecast $594M in revenue (consensus $579M), pro forma EPS of $1.63 (consensus $1.50), shipments of 290MW, a module ASP $1.70/w, and $100M of systems revenue. Pro-forma EPS excludes $26.5M in one-time charges associated with severance/executive compensation and the Opti transaction....2Q10 Metrics: We forecast $533M in revenue (consensus $556M), pro forma EPS of $1.70 (consensus $1.65), shipments of 310MW, a module ASP $1.64/w, and $23.5M of systems revenue."

"We anticipate that FSLR will report better than expected results for 4Q09, and that 1Q10 consensus estimates may be conservative. While we have plenty of concerns regarding 2010 (oversupply, FX, utility timing), we believe FSLR will outperform through uncertainty given its industry leading cost structure and earnings growth potential for 2011 associated with capacity ramp."

*Max Pain is the strike price where both puts and call lose the most money at expiration. Here's one calculator, just input the symbol and hit submit. From Option Pain:

What is Option Pain?
In the option market, wealth transfer between option buyers and sellers is a zero-sum game. On option expiration days, the underlying stock price often moves toward a point that brings maximum loss to option buyers. This specific price, calculated based on all outstanding options in the market, is called Option Pain. Option Pain is a proxy for the stock price manipulation target by the option selling group.

How Should I Read the Option Total Chart?
Option Pain point is represented by the lowest bar in the chart. At this price, all the options in the market have the smallest dollar value....