FSLR - First Solar among TD Cowen's top ideas as brokerage favors solar utility over residential

2023-12-19 14:27:48 ET

First Solar ( NASDAQ: FSLR ) stock on Tuesday was among the top S&P 500 ( SP500 ) percentage gainers, after TD Cowen picked the company as one of its top ideas for the long term in the solar utility space.

Shares of FSLR advanced as much as 7% to $177.51, and were last up 5.1% in late afternoon trade. The stock in on track for its fourth positive session in five .

TD Cowen said that within the solar industry, it still continued to favor utility over residential, as it saw the latter facing demand headwinds, elevated channel inventory, and high interest rates along with the impact of recent regulatory changes in California.

The brokerage added that despite the Federal Reserve's indication of interest rate cuts in 2024, it expects sentiment around renewable energy to stay volatile due to the upcoming Presidential elections.

"While many equities are trading at prices and multiples below pre-IRA (Inflation Reduction Act) levels, we continue to observe investor anxiety around a Republican sweep for the sector. We note that the IRA stimulates both demand side and supply side economics of renewables," TD Cowen analyst Jeffrey Osborne said in a note.

"The bulk of the supply side has been placed in Red states and is leading to a great deal of jobs. We see an extremely low likelihood of Federal interference for supply side kickers especially given they are set to phase out in 2032," Osborne added.

Turning to TD Cowen's thoughts on First Solar ( FSLR ), the brokerage believes that the Tempe, Ariz.-based solar panel maker "has a disruptive cost profile versus peers and generally a better product versus crystalline silicon modules."

"We see sentiment on the story closely aligned with the election in the near term given they benefited the most from the IRA initially and would have the most to potentially lose should the 3-4 cent price premium they capture for domestic content go away and/or domestic manufacturing credits are removed," TD Cowen's Osborne said.

First Solar ( FSLR ) in October delivered quarterly results that beat profit expectations. Its report was received much more favorably at the time than other solar peers which posted weak earnings and issued disappointing guidance.

Wall Street analysts and SA Authors rate First Solar ( FSLR ) stock Buy. Seeking Alpha's Quant rating on the stock is Hold.

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