UBS Upgrades First Solar, Raises Price Target To $150 (FSLR)

UBS is raising its price target on shares of First Solar

to $150, and is upgrading shares to Buy on stronger than expected industry growth. In the research note to clients, UBS writes, "We adjusted our 2010 global solar module average selling price (

) to $1.90/W (prior: $1.65/W) as 2H10 remains firm. We estimate module ASPs decline -21% to $1.50/W in 2011 and are $1.28 in 2012, accounting for feed-in tariff reductions. Our “stress test” for module maker margins in 2011 favors First Solar and Yingli." Later in the research report, UBS writes, "We upgraded our rating on First Solar to a Buy rating on our higher industry growth estimates as we now model First Solar to ship approximately 400MW of modules to France and Italy in 2011 versus our prior view of 250MW. We also believe a potential buyer of its Agua Caliente (348MW) project should be able to receive financing as our analysis estimates the project can achieve an 18% IRR. We also estimate polysilicon spot prices will rise 20% to $60/kg in 2H10 versus 1H10 and remain steady through mid-2011 which likely limits solar module price pressure. We increased our 2010 and 2011 EPS estimates to $7.50 and $8.80 compared to $7.30 and $8.00 previously. Our new 12-month price target is based on applying a 17x P/E multiple to our new 2011 EPS of $8.80." UBS goes on to say, "In the U.S., we are modeling 2011 solar demand to be 1750MW driven by the utility scale installations of 800+ MW by First Solar and Sunpower combined. Our analysis suggests that 15% yoy decline in panel prices per watt will bring unsubsidized system install costs to $5-$6/watt for residential scale and $3-$4 for utility scale, which should help drive the US market demand up 119% yoy in 2011 vs. 800MW in 2010. Based on recent developments in energy policy legislation, our checks suggest greater probability of extension of treasury cash grant in lieu of 30% investment tax credits, which could add to the upside of our forecast." Shares of First Solar closed at $125.03 on Friday. You Can't Afford Miss To Out On These Money Making Trading

.