FSLR - First Solar rises after UBS upgrades as investment tax credits ready to ramp

First Solar ( NASDAQ: FSLR ) +4.8% in Friday's trading to its highest level since 2008 after UBS upgraded shares to Buy from Neutral with a $250 price target, boosted well above its previous forecast of $140, saying the company is "the most significant beneficiary" of the Inflation Reduction Act.

First Solar ( FSLR ) is "well positioned for years of outsized earnings driven by high demand for its domestic capacity as developers strive to gain the 10% domestic content [Investment Tax Credit] adder in the IRA," UBS analyst Jon Windham wrote, saying it is positioned to gain $1.7B annually from the U.S. domestic manufacturing tax credits when it completes its planned U.S. production expansion.

Windham previously was cautious on the potential impact of startup and ramp-up costs driving margin dilution in 2023-24 as First Solar ( FSLR ) raises its U.S. manufacturing, but now he said the scale of the domestic manufacturing tax credits more than absorbs such concerns.

The analyst also expects First Solar's ( FSLR ) U.S. production volumes will more than double from an estimated 4.3 GW in 2023 to 10 GW by 2027.

First Solar ( FSLR ) shares have soared more than 20% since the company reported a smaller than expected Q4 loss and issued upside guidance for 2023 .

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