stock (ticker: FSLR) soared Wednesday after
added the company to its list of top stocks in the Americas.
The back story. Solar power stocks struggled in 2018, as global demand fell. Last year, U.S. installations fell 2% compared with 2017, according to the Solar Energy Industries Association’s 2018 market report.
In March, Goldman Sachs analyst Brian Lee said several stocks in the sector could benefit from an upswing in solar power installations and that demand for solar power could grow double digits in 2019 and 2020, helped by supportive policies in Europe, the U.S., and Asian countries.
He named first First Solar, a manufacturer that sells to utility companies, as one of the likely companies to benefit, Barron’s wrote.
What’s new. Goldman Sachs added First Solar to its Americas Conviction List on Tuesday. The list represents investment recommendations which are “focused on the size of the total return potential.”
First Solar stock was up 7.3% to $60.32 Wednesday afternoon, on pace to see its largest one-day percent increase since January 11, 2018, when it rose 9.52%. The stock traded as high as $60.66 during Wednesday’s session, which is its highest intraday level since June 2018, when it hit $60.89.
Looking ahead. Lee reiterated his Buy rating and raised his price target to $75 from $64 in a note to clients.
Capacity expansion in Malaysia, strong demand for utility-scale projects, and commercial demand driving incremental systems volume were catalysts for the increased price target, he wrote.
“Our analysis suggests continued strength in the U.S. utility-scale development pipeline, a tailwind FSLR is well positioned to harvest with its significant U.S. exposure,” Lee wrote.
“With the strongest balance sheet amongst solar peers,” he wrote, “net cash of ~$20 per share and a high quality franchise, we believe a premium [price-to-earnings ratio] multiple for FSLR is warranted,” he added.