Baird Names First Solar Its Top Sector Pick

First Solar, Inc. FSLR has won a top-notch rating from Baird. 

The Analyst

Baird analyst Ben Kallo upgraded shares of First Solar from Neutral to Outperform and increased the price target from $69 to $82.

The Thesis

Analyst Kallo said  First Solar is his favorite solar name due to its strong pipeline, continued cost and efficiency improvements and strong balance sheet. (See Kallo's track record here.) 

These factors will likely help fund the Series 6 ramp and provide growth optionality moving forward, the analyst said. 

First Solar's revenue visibility, industry-leading balance sheet, differentiated technology and incremental R&D investment should drive efficiency gains, Kallo said. 

"Importantly, we believe FSLR has some scarcity value given the company's comparatively large market cap, and think FSLR is one of the only investable names in the solar industry." 

Although Baird projects some technological and execution risk around the ramp of the Series 6, the firm expects shares to appreciate further in the near term, thanks to catalysts such as project wins, potential U.S. tariffs on competitor's c-Si modules and more. Potential headwinds associated with the Series 6 production ramp exist in the future, Kallo said. 

Even if a Section 201 tariff is not enacted, Kallo said First Solar's contracts have clauses in place to prevent customers from breaking agreements.

Despite the shares appreciating substantially in 2017, Baird sees significant upside potential and accordingly recommends buying the shares at current levels.

The Price Action

First Solar shares are up a whopping 120 percent in year-to-date

At the time of publication, First Solar was trading down less than 1 percent at $69.45.

Related Links:

Credit Suisse: NextEra Energy A 'Premier Solar And Wind Play'

Let The Sun Shine In: The Many Reasons First Solar Is Now A Buy