Thin-cell panel manufacturer First Solar (NASDAQ:FSLR) could be set to see a large upside as solar sales in the U.S., which is its home market, showed strong growth in Q1. According to a new report by GTM Research, panel sales in the U.S. jumped 85% in Q1 over the same period last year. 
The strong growth in a historically weak quarter has prompted analysts to increase their estimates for panel sales in the country. Robust panel sales also dispelled fears that the duties imposed on solar equipment from Chinese manufacturers would increase the cost of solar energy, hurting overall demand. Strong sales in the U.S. market will be a major relief for the beleaguered solar industry, and First Solar in particular, because of the tariffs imposed by the U.S. Commerce Department on Chinese imports.
We have a $22 price estimate for First Solar, which is at a 45% premium to its current market price.
According to GTM Research, the U.S. added 506 MW of solar capacity in the first quarter of 2012.  Strong sales in the first quarter came as a surprise, as companies usually see a drop in demand during the period. The jump is partially attributed to orders from projects that qualified for a grants program that expired in December last year. Demand from these projects could boost sales for the rest of 2012, and analysts estimate that the U.S. may add up to 3.3 GW of solar capacity this year. This would make the U.S. the fourth largest market for solar panels this year, accounting for 11% of global panel demand. The U.S. market is expected to show robust growth despite falling module demand worldwide and the risk of higher module prices because of import tariffs on Chinese equipment.
Within the U.S., New Jersey became the top state for installations, with 174 MW of capacity added in the quarter.  California was the second largest market, adding 148 MW for the period. Panel prices declined to $0.94 /watt, but overall cost decline was limited. Strong growth in panel installations could result in huge upside for First Solar, as it now enjoys a significant advantage over Chinese competition because of import tariffs.Notes: