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First Solar's stock rocketed Friday as UBS analysts said the solar panel company was in a strong position because of the inflation law.
UBS analyst John Windham upgraded First Solar (ticker: FSLR ) to buy neutral and raised its target price to $250 from $140. This represents about a 20% jump for the stock at its current price.
Windham wrote in a research note Friday that First Solar is the "largest Reducing Inflation Act (IRA) recipient within its coverage area with high visibility, revenue and capacity earnings through 2026."
The law was approved in August. There are tax breaks for people to buy clean energy like solar panels, and lots of solar stocks have increased sharply as investors believe the stimulus will boost demand for clean energy.
Analysts are more optimistic about the industry and First Solar. Six of the 19 people who reported on First Solar in FactSet a month before the law passed said the stock was bought and six said it was sold. Now, 17 out of 26 analysts rate the stock as a buy and none as a sell. Windham had just joined this troop of cops.
"In our view, FSLR is well positioned for external revenue driven by strong demand for domestic capacity," Windham wrote.
Windham's optimism comes two days after First Solar's guidelines for 2023 net sales and operating profit beat Wall Street forecasts. That's partly because the company expects to receive between $660 million and $710 million in IRA tax credits.
Announcing the company's results, chief executive Mark Widmer said they had “started the year with a record book of orders, a strong suite of booking opportunities and strong demand in our core markets.
First Solar rose 5.6% to $209.39 on Friday, the stock's highest close since September 2008, according to Dow Jones market data. It was also the fourth best performer on the S&P 500 on Friday. The stock is up 39% this year.
Email Angela Palumbo at angela.palumbo@dowjones.com
