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Consistent R&D efforts from solar cell manufacturer First Solar Inc. (FSLR - Analyst Report) yielded positive results. The company was able to manufacture its most advanced thin-film photovoltaic (PV) module, the Series 3 FS-392, which is rated at 92.5 watts. The new modules abide by existing IEC certifications and Underwriters Laboratories (UL) listings for the Series 3 family.

Solar cell manufacturers continue to invest in R&D with the sole objective of producing advanced PV modules, having higher conversion rates. This is crucial as higher conversion rates bring down the cost of implementing a solar power project.

First Solar strives to bring about greater efficiency in module conversion. The company invested $32.4 million in R&D in the third quarter, which comprised 3.9% of total sales.

The thin-film technology used by First Solar to develop solar modules make them more efficient compared to the silicon PV. These new solar modules have high energy density and are capable of being used in PV systems of up to 1,000 volts. This voltage is typical for large scale PV power plants.

Solar cell manufacturers in the U.S. are facing strong competition from their Chinese counterparts. The China-based companies have flooded the market with lower priced solar modules. We believe the one way to counter this threat is by developing cheaper, high-quality solar modules. Besides, the decision by the U.S. government to impose anti-dumping duty and counter subsidy duty on the Chinese manufacturers will definitely make the competition more even.

We believe the demand for its new products, cost structure improvement and contract wins will help First Solar to achieve the earnings per share target of $4.40 to $4.70 per share for 2012. The Zacks Consensus Estimate for 2012 is $4.59 per share.

We presently prefer First Solar with a short-term Zacks #3 Rank (Hold rating) to its peer Suntech Power Holdings Co. Ltd. that has a short-term Zacks #4 Rank (Sell rating).

Headquartered in Tempe, Arizona, First Solar Inc. designs, manufactures, and sells solar electric power modules using a proprietary thin film semiconductor technology.

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