First Solar (NASDAQ:FSLR) Pressured by Capex, Margins

While First Solar (NASDAQ:FSLR) remains one of the favorites of the solar sector, they do face some significant challenges and uncertainty, including margin and capex concerns.

Barclays (NYSE:BCS) noted, "Although investor expectations were high, guidance was somewhat better than the buyside EPS consensus of $9.00. More importantly, we think the guidance is based on conservative assumptions for both systems and modules business and believe room for upside to $10.00+ exists if overall demand environment turns out to be in line with expectations.

"Key concerns: (i) 2011 capex expected to increase to - $1bn, (ii) Back-end loaded guide, Q1 guidance below consensus - most revenues/earnings expected to be in 2H11. Q1 EPS of - $1.25 is below consensus of - $1.67, (iii) Systems margins not sustainable - DOE loan/Agua Caliente financing and Ontario projects inflate 2011 margins, (iv) No overall gross margin guidance was provided, (v) EPC revenue guidance assumes allocation for greater than 400MW projects."

Barclays maintains an "Equalweight" rating on First Solar, which closed Wednesday at $135.15, down $1.89, or 1.38 percent. They have a price target of $144 on them.