We Still Love First Solar, Even After The 8point3 IPO, Stifel Says

In a report published Tuesday, Stifel analyst Sven Eenmaa reiterated a Buy rating and price target of $81 on

, following the pricing of the

IPO. "We see several tailwinds for First Solar ranging from additional fully-developed utility-scale projects in the pipeline to expand bookings, increasing value capture from existing $7.6bn backlog, higher module conversion efficiency and energy density-driven $/W cost reductions and expansion of addressable markets," Eenmaa said. The analyst also believes that there is upside to the value of First Solar's stake in 8Point3 Energy. The cost of capital benefits from the launch of 8Point3 Energy is likely to add value to First Solar's fully developed project backlog, with the monetization of PV plants. "We continue to see material growth potential for 8point3's CAFD beyond the initial portfolio's $70 million, given high visibility into projects to be dropped down and their COD dates largely in 2016, as well as sponsors' ability to contribute additional projects," the Stifel report stated. Given First Solar's recent CdTe module conversion efficiency track record as well as the improvements in energy density, combined with the management's expextations of achieve fully system costs below $1.00/W by 2017, the analyst expects further cost improvements, along with "energy density-driven reductions to balance of systems costs per watt." This in turn is expected to drive margins, while enhancing utility scale and distributed generation potential.