FSLR - Should you buy First Solar after double-digit gains and analysts' buy rating?
2023-11-15 08:34:26 ET
First Solar Inc. (NASDAQ:FSLR) is up 11.43% today, but analysts at Roth MKM expect the value to hit $230. The stock trades at $149, representing a 54% upside potential. The recent upgrade follows October “buy” and “overweight” ratings at Barclays, JP Morgan, and Deutsche Bank. But do the ratings justify First Solar’s potential and share price?
Perhaps it would be good to revisit why these leading institutions have rated First Solar highly. In its October review, Barclays said First Solar had thwarted rivalry from its Chinese solar peers. Barclay cited First Solar’s cadmium telluride technology as its key strength. The bank analysts believe $224 is the right valuation for First Solar stock.
JPMorgan says the recent pullback in the stock is a significant opportunity for buyers. The rating happens even as First Solar fell from a record $231 price in May to a low of $129 earlier this month. At the time of rating, First Solar was trading around $143. JPMorgan’s rating projected a 62.57% price surge, an “overweight” rating.
Deutsche Bank believes First Solar could rise to $235. Analysts say the company’s gross margins could increase by more than 42% next year due to a new law, the Inflation Reduction Act. The Act promises new tax credits that would cushion renewable energy companies, benefiting solar stocks.
Barclays, JPMorgan, and Deutsche Bank ratings came before First Solar released its earnings. So, the Roth MKM had the benefit of using the quarter results to predict the stock price. As such, First Solar reported earnings of $2.50 per share in the third quarter, exceeding $2.05 per share estimates. Consequently, Roth MKM believes the robust quarter results are a bull catalyst. That despite the company reporting a lower than expected revenue.
The analysts also say First Solar’s more-than-expected bookings of 10GW boost the stock. Analyst Philip Shen expects First Solar to increase the booking due to its robust pricing model. The capacity could boost the stock, making it attractive.
Not out of the hoods yet? FSLR technical outlook
Source – TradingView
While First Solar has the weight to back the robust ratings, its technicals may be a little disappointing. The stock remains below a broader bearish trendline. An RSI reading of 51 also suggests that bears nearly match buyers.
What is promising is a clear recovery that gives bulls a bigger chance to override bears and cause a reversal. Should the gains continue, First Solar may set a price floor at $129 and embark on a bullish momentum. The immediate levels for buyers’ target are $175, $190, $210, and $216.
What to watch out for?
First Solar is attractive despite remaining on a bear momentum. Investors should watch for a potential breakout of the bearish trendline before buying FSLR. A breakout will send a clear reversal signal that may attract more buyers amid the positive sentiment.
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