The Time To Buy First Solar Is Now: Analyst Sees Attractive Entry Point, Upgrades Stock

BMO Capital Markets analyst Ameet Thakkar upgraded First Solar, Inc FSLR to Outperform with an unchanged price target of $237.

The analyst noted that FSLR already had better visibility than most peers due to its current backlog, ASPs, and PTC advantage. 

Now, Thakkar says he has a clearer view of its earnings for 2024-26, the potential for better-than-expected results, and promising signs for progress beyond 2027 at favorable pricing.

Despite falling global prices for solar modules, the analyst sees FSLR steadily building sales volumes at ASPs closer to what it has recently achieved.

Thakkar also applauds FSLR's announcement of a 5 GW order from solar developer Energix at an average ASP of $0.30/watt or ~ 7% of annual U.S. sales volume using assumptions for 2026-2030.

In fact, the Longroad deal pricing would be at a similar level, mentions the analyst.

Read More: First Solar And Longroad Energy Supercharge Partnership With 2GW Boost, Totaling 8GW Since 2017

In fact, Thakkar adds that the recent weakness in FSLR shares presents an attractive entry point. 

FSLR share price has declined 18% since its 2Q earnings call compared to 3% for the S&P 500 over this timeframe.

The analyst notes that FSLR's current share price is discounting a utilization rate of 75% and ASP of around $0.26/watt.

Thakkar remains upbeat about FSLR's plans for another new U.S. solar module plant (2 GW 2027+), which may generate +40% ROIC (including the impact of PTCs).

Although this is a modest sum relative to some of FSLR's other larger framework agreements, assuming a lower utilization rate in 2027+ would still represent a ~ 4% commitment of anticipated U.S. sales volumes.

For FY23, the analyst sees an EPS of $7.52; for FY24, the analyst expects an EPS of $14.14.

Price Action: FSLR shares are trading higher by 2.32% to $174.45 on the last check Thursday.