First Solar (FSLR)is engaged in the manufacturing and sale of solar modules with an advanced thin film semiconductor technology. The firm also designs, constructs and sells photovoltaic solar power systems to customers around the world. First Solar competes with other solar industry players like SunPower(SPWRA), Suntech Power(STP) and Yingli Green Energy Holding Com.

Alternative energy issue First Solar, Inc. (FSLR) attracted the attention of a skeptical options trader today. Not long after the opening bell, a skeptically skewed short call spread crossed the tape on FSLR, with the speculator betting on lackluster price action during the short term.

Around 10:35 a.m., a block of 236 April 120 calls traded near the ask price, suggesting they were purchased. Simultaneously, a matching block of 236 April 115 calls changed hands near the bid price, indicating they were most likely sold. With FSLR trading around $110 at last check, both of these options are out of the money.

First Solar (FSLR) is attracting some mixed attention from analysts this morning, after the company offered a solid 2010 outlook last night. The alternative energy issue said it expects sales of $2.7 billion to $2.9 billion for the upcoming fiscal year, outpacing analysts' expectations for $2.4 billion.

"2010 is going to be stronger, we think, than 2009," said CEO Robert Gillette. Global demand is expected to reach 7.5 gigawatts, with overall demand projected to rise 35% per year through 2012. However, he added, "We think supply will still exceed demand in 2010."

However, the company's earnings forecast was more modest. FSLR expects 2010 earnings of $6.05 to $6.85 per share, with the low end of this range falling well short of Wall Street's consensus estimate for $6.55 per share.

Sunny skies are here for Ausra, the solar thermal company backed by Kleiner Perkins and Khosla Ventures. The company is looking for a buyer, and it's already talking to three, according to a report by Reuters. Everything is up for grabs, from a majority stake in the company to 100% of it, and the back-and-forth going on is at a "very aggressive level."

The businesses looking to pick up Ausra are said to be global power generation conglomerates but haven't been named yet. So, the clean energy company would be a way for one of them to diversify.

Analyst upgrades:

• Citigroup upgraded Adtran (NASDAQ: ADTN) to Buy from Hold on expectations the company will benefit from the broadband Stimulus funds.
• Morgan Stanley upgraded Continental Airlines (NYSE: CAL) to Overweight from Equal Weight based on relative valuation and views the company as a "survivor." Additionally, the analyst lowered 2009 industry estimates but believes it is the last cut for the year and is incrementally more positive on the sector.
• Morgan Stanley also upgraded EXFO Electro-Optical (NASDAQ: EXFO) to Overweight from Market Weight based on valuation.
• Tata Motors (NYSE: TTM) was upgraded to Buy from Hold at Deutsche Bank.
• Ascent Solar (NASDAQ: ASTI) was upgraded to Neutral from Underweight at JP Morgan.
• Mechel Steel (NYSE: MTL) was upgraded to Neutral from Underperform at Credit Suisse.

This post was written by Minyanville contributor Smita Sadana.

A trade doesn't simply have an initiation and finale – the most important part of a trade is its evolution and constant re-assessment if the original thesis that the trade was initiated with, still holds true.

On that note, let's look at First Solar (NASDAQ:FSLR). I started a short position in it on 6/1 when instead of participating in the market advance, it lagged (due to a LA Times story that FSLR's acquisition of "strategic land rights" is under scrutiny). Recall, it came on the heels of a cautious mention in Barron's on May 26th. So, both times, FSLR reacted negatively to negative news and volume picked up on both those instances.

Today, Pacific Crest Securities reiterated its buy rating on FSLR and called the recent weakness a "buying opportunity."

I

Generally, my bias is toward large-cap companies with a demonstrated business model. In a nutshell, "experimental" business models need not apply. However, every once in a while I make an exception, and First Solar (NASDAQ: FSLR) is one. Here's why:

In addition to growth potential for its proprietary thin film semiconductor solar module technology, First Solar has a building macroeconomic tailwind in the bottoming U.S./global recession and dawning recovery. The First Call FY2009/FY2010 EPS estimates for FSLR are $7.18 to $8.72.

The shares of First Solar, Inc. (NASDAQ: FSLR) have started the week on a rocky note. Not only did Friedman, Billings, Ramsey & Co. downgrade the stock from Market Perform to Underperform, the alternative energy issue was also the topic of a skeptical Barron's article over the weekend.

In a note to clients, brokerage firm Friedman cited weak polysilicon prices and the stock's overrich valuation for its downgrade. FSLR closed last Friday at $191.72 per share, compared to Friedman's price target of $110.

Meanwhile, the cautious Barron's write up [subscription required] observes that the Intersolar trade show begins Wednesday in Munich, and pits FSLR against many lower-priced rivals. "One leading customer says it will ditch First Solar's 'thin-film' panels if crystalline silicon alternatives keep getting cheaper.

That seems likely. Silicon prices are expected to drop another 30% by year end. First Solar profits -- and its shares -- could get cut in half," commented the financial paper.