4 Reasons Deutsche Bank Upgraded First Solar

Between successful product development and a favorable regulatory environment, First Solar, Inc. FSLR is in a good place, according to Deutsche Bank.

Analyst Vishal Shah upgraded the solar power firm to a Buy Friday and raised his price target from $50 to $65.

What’s Going Well?

As U.S. demand drives higher pricing, the effects are compounded by client stockpiling ahead of a ruling on the section 201 tariff. Deutsche Bank sees “high likelihood of ITC [the International Trade Commission] finding injury in the section 201 case.” The circumstances could result in 2018 series 4 margins between 20 and 30 percent against a 2017 rate of 17.5 percent.

At the same time, Shah expects heightened demand to prompt a 1-gigawatt increase in series 4 capacity delivered in 2018.

This could concur with earlier-than-expected orders of series 6 modules, which Deutsche Bank predicts arriving in late 2017 rather than mid-2018.

Finally, monetization of the phase 1 California Flats Solar Project coupled with the anticipated sale of the company’s stake in 8Point3 Energy Partners LP CAFD could drive upside to near-term estimates.

What’s The Outcome?

These factors justify key estimates changes, with Deutsche Bank raising 2017 revenue from $3,032 million to $3,077 million and earnings per share from $2.22 to $2.37.

First Solar closed Thursday at $48.43 but was up 2.7 percent in early Friday trading.

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