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Analyst Brightens Prospect On First Solar For First Time Since 2010

Analyst Brightens Prospect On First Solar For First Time Since 2010

After remaining either on the sidelines or bearish on First Solar, Inc. (NASDAQ: FSLR) for about a decade, an analyst at Raymond James deemed it fit to shift to the bullish camp.

The First Solar Analyst

Analyst Pavel Molchanov upgraded First Solar from Market Perform to Outperform, with a price target of $65.

The First Solar Thesis

Investor sentiment toward clean tech has turned the best in more than a decade, as reflected by the ECO index's 58% jump in 2019 and an incremental 27% year-to-date, Molchanov said in a Monday note. However, First Solar shares have not participated in this euphoria, given the mere 10% rally in the year-to-date period, which has offset the gain made in 2019.

PV module manufacturing, both crystalline and thin film, is a fundamentally commoditized business, with module pricing continuing to tick down, Molchanov noted. However, First Solar, though part of the commoditized industry, is large-scale, cost-competitive and highly bankable.

"First Solar is the only U.S.-based module supplier in the global top ten, and it is also the only one without direct Chinese exposure - needless to say, politically advantageous these days," the analyst wrote in the note.

First Solar's 2020 gross margin guidance of 26-27%, according to the analyst, puts the company in the industry's top quartile. The analyst also noted capital spending has peaked and the balance sheet remains exceptionally cash-rick, making buyback a free option.

First Solar, according to Raymond James, is "one of the few remaining value ideas - arguably, deep value - in clean tech."

"Yes, this is undeniably a commoditized business, and quarterly results have a tendency to be lumpy, but with the stock at 5x 2021E EBITDA - also a modest 6.5x based on 2020 guidance - we think risk/reward is nicely tilted to the upside," Molchanov wrote.

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Latest Ratings for FSLR

Aug 2020B of A SecuritiesMaintainsBuy
Aug 2020B of A SecuritiesUpgradesNeutralBuy
Aug 2020Raymond JamesMaintainsOutperform

View More Analyst Ratings for FSLR
View the Latest Analyst Ratings


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