First Solar (NSDQ: FSLR) shares jumped more than 30 percent Wednesday after the company posted fourth-quarter income more than seven times higher than the year-ago quarter.
The Phoenix-based company made $62.9 million, or 77 cents per share, compared with an income -- minus one-time items -- of $38.5 million, or 49 cents per share, in the third quarter. The company had an income of $8 million, or 11 cents per share, in the fourth quarter of 2006.
First Solar posted revenue of $200.8 million, up 26.3 percent from $159 million in the third quarter and from $52.7 million in the year-ago quarter.
Analysts had expected earnings of 53 cents per share on $180 million in revenue, according to a Thomson Financial poll. Share prices rose $52.90 to $228.46 per share on the news.
With its cadmium-telluride films, which convert sunlight into electricity without using precious silicon, First Solar has increased its margins in a time when other solar companies' margins are shrinking (see LDK 2008 Guidance: Higher Revenues, Lower Margins).
The company's gross margin grew to 55.3 percent in the fourth quarter, up from 51.6 percent in the third quarter and up from 48.6 percent in the fourth quarter of 2006, Chief Financial Officer Jens Meyerhoff said in a conference call.
He attributed about 1 percentage point of the increase to the growth of the euro over the third quarter. Other factors included lower costs through larger volumes, speedier manufacturing and higher efficiency converting sunlight into electricity, he said.
CEO Michael Ahearn said the increased volume from a new German plant in the fourth quarter, combined with efficiency gains, lowered the manufacturing cost 12 percent over the last year to $1.12 per watt in the fourth quarter.
Piper Jaffray raised its price target on First Solar to $280 per share, from $250 per share, in response to the quarter.
"We continue to believe that FSLR is the only solar [manufacturer] capable of providing utilities with a solution to meet renewable portfolio standards near term, thereby substantially increasing its addressable market and growth prospects," the report states. "We do not see any near-term threats to FSLR stemming from new entrants into the [cadmium-telluride] market or any other thin-film technology."
Other thin-film companies certainly are trying to give First Solar some competition. Moser Baer said earlier this week that it would invest $1.5 billion in thin-film solar, Nanosolar began production of its films in December and HelioVolt closed a $101 million round for its films in October (see Moser Baer to Pump $1.5B into Thin Film, Nanosolar Begins Production, HelioVolt Gets More Cash for Thin Solar, Bulking Up On Thin-Film Solar, Thin Film Solar to Leap Forward and Thin-Film Solar Gets Another Boost).
But while other thin-film companies continue to push into the market, First Solar has stood out as the one of the few thin-film companies to reach large volumes (see Thin Films Lead U.S. Solar Production). The company said it produced 77.1 megawatts worth of thin-film panels in the fourth quarter and plans to grow capacity to approximately 1 gigawatt by the end of 2009.
The company saw a 37.6 percent bump in its share price in November, reaching a high of $230 per share after it posted third-quarter earnings. Solar prices have been volatile in the last few months following concerns about a potential recession, as well as the possibility that renewable-energy incentives might not get renewed.