Deutsche Bank: 3 Reasons To Remain Bullish On First Solar

First Solar, Inc. FSLR shares sold off Friday despite a bottom-line quarterly beat and increase in annual guidance — but Deutsche Bank is still buying.

The Rating

Analyst Vishal Shah maintained a Buy rating on First Solar with a $75 price target.

The Thesis

Deutsche Bank considers the company’s annual revenue guidance conservative even after the raise. By Shah’s assessment, three conditions justify continued optimism:

• First Solar expects its S6 modules to offset S4 module discounts and generate a premium to c-Si panels. This could drive 2019 average selling prices above 2018 levels.
• Shah anticipates capacity expansion in the U.S. considering the firm’s 9-gigawatt backlog and near-term potential to sell out through 2020. “This incremental capacity expansion would be net accretive to earnings in our view, since the company would likely receive additional tax incentives for domestic/U.S. manufacturing,” he said. 
• First Solar is seen to have the greatest backlog in U.S. business, which generates higher price points and better margins than international bookings.

Price Action

At the time of publication, shares were trading up 4.22 percent at $64.40. 

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