5 Reasons Deutsche Bank Still Likes First Solar Stock

• First Solar, Inc FSLR shares have surged 51 percent since August 3, but are trading below their 52-week high of $72.17.
• Deutsche Bank’s Vishal Shah maintained a Buy rating for the company, with a price target of $86.
• Improving module efficiencies and declining costs are expected to drive First Solar’s margins in the near future, Shah noted.

Analyst Vishal Shah mentioned that First Solar’s shares are expected to continue performing well over the next 3-6 months. He added, “Despite 15-30% YTD decline in solar stocks across the board and 6.5% YTD decline of the S&P, FSLR shares are relatively flat.”

While First Solar’s shares have climbed 52 percent since September 2015, versus a 2 percent decline in the S&P, investors remain concerned about the company’s 2017 earnings outlook, Shat noted.

The Deutsche Bank report listed five positive features of the First Solar story:

1. Concerns related to First Solar’s 2017 earnings outlook appear overblown and the company’s earnings power from unsold projects on its balance sheet has not been considered fully.
2. With First Solar’s book-to-bill ratio likely to remain above 1 in 2016 and nearly 75 percent of its bookings for 2016 already made in 2015, most of the incremental bookings are expected to support the company’s 2017 earnings outlook.
3. The Street is not giving due credit to the cash on First Solar’s balance sheet.
4. The company is likely to review its decision to pause the roll-out of its efficiency improvement program following the ITC extension.
5. First Solar has a 2018 earnings power of more than $4 even in a conservative scenario of 60 percent module shipments.