Why This First Solar Analyst Says There's More Runway Ahead For Stock

First Solar Inc. FSLR is the most direct and immediate beneficiary of the recently launched manufacturing tax credit for domestically produced solar panels, according to KeyBanc Capital Markets.

The First Solar Analyst: Sophie Karp upgraded the rating for First Solar from Sector Weight to Overweight, while establishing the price target at $145.

The First Solar Thesis: The stock has outperformed, and the upside is particularly driven by First Solar’s “progress towards capacity additions and efforts towards reducing sensitivity to input costs,” Karp added.

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“We estimate that with just the existing and announced capacity, FSLR could be eligible for as much as ~$400M in tax credits, and should achieve at least a 20% gross margin by 2025 on $3B+ in sales,” the analyst wrote. “Given FLSR's historically significant operating leverage, we expect its earnings power to reach $5.78 before tax credits or giving it any recognition for potential future capacity build-out.”

FSLR Price Action: Shares of First Solar had risen by 1.19% to $115.87 at the time of publication Thursday.