BofA Upgrades First Solar On Valuation, Net Cash Balance

Following the sharp downturn in First Solar, Inc FSLR amid the broader market sell-off due to coronavirus (COVID-19) impact concerns, the stock seems fairly valued at current levels, according to BofA Securities.

The First Solar Analyst

Julien Dumoulin-Smith upgraded First Solar from Underperform to Neutral, reducing the price target from $54 to $38.

The First Solar Thesis

First Solar’s stock is trading at historic lows multiples, but the valuation seems fair with incremental conservatism embedded in the estimates till 2022, Dumoulin-Smith said in the note.

First Solar’s utility-scale solar end-market is least impacted by COVID-19 concerns, since the company has larger projects with longer construction timelines for project developers to meet their Commercial Operation Date deadlines, the analyst mentioned.

He added that around half of the company’s current market capitalization comprises of its net cash balance at $16 per share.

The analyst mentioned that latest checks indicate easing concerns over supply constraints related to upstream manufacturing production and First Solar has also confirming continued operations at all its facilities.

He maintained the average selling price estimates for 2020 and 2021 at 36 cents per watt and 32 cents per watt, respectively, given locked-in pricing for backlog.

FSLR Price Action

Shares of First Solar slipped slightly to close at $36.06 on Monday.