8point3 Makes First Solar Stock Worth $73, Needham Says

In a report published Friday, Needham analyst Y Edwin Mok maintained a Buy rating on

, while raising the price target from $69 to $73. First Solar has become a GP for renewable asset after the successful IPO of its joint yieldco with

, 8point3 Energy Partners LP (CAFD). "8point3 is uniquely positioned as a solar-only yieldco with joint sponsorships by two of the largest solar developers in the world. We believe FSLR's mixed model of leveraging yieldco, direct sell and 3rd party modules might extract less value out of its pipeline, but ensure a more longer-term sustainable business," analyst Y Edwin Mok mentioned. The $21 pricing of 8point3 IPO suggests strong investor demand as the enthusiasm regarding energy-based yieldcos continues. In the report Needham noted, "We expect the underwriters to exercise the over-allotment, which increases the offering to 23M shares and raising more proceeds for CAFD, but does not change FSLR's 31.1% voting interests based on the deal structure. FSLR will collect $146M of proceeds from the offering." Mok believes the 50/50 sponsorship structure "creates some limitations" for the company to delegate projects to 8point3. Since First Solar does not have controlling interests, it need to seek FSLR needs to seek SunPower's agreement before adding projects to the ROFO list. 8point3's IDR structure is expected to increase distribution to First Solar in the later years as the yieldco grows.