By Senad Karaahmetovic
Shares of First Solar (NASDAQ:FSLR) are up over 6% after two analysts upgraded the company’s stock rating following the passage of the Inflation Reduction Act in the Senate yesterday.
A JPMorgan analyst upgraded to Overweight from Neutral with a $126 per share price target, up from $83.
The analyst says the Inflation Reduction Act is “the largest policy change in US history to accelerate growth in what we have viewed as an already inevitable energy transition to renewables”.
“FSLR has nearly 3 GW of US-based module capacity, expanding to 5.9 GW by YE24 that will qualify for domestic manufacturing tax credits – $0.04/w cell, $0.07/w module, and likely to include $12/sq. meter for wafers (FSLR’s thin-film tech doesn’t include polysilicon wafers, though we expect the company to be able to qualify for the credit). We calculate the value of the credits (received post-tax) to add $931mm to FY24E net income ($8.63 per share),” he explained in a note.
Similarly, an analyst from Guggenheim raised the rating to Buy from Neutral with a $135 per share price target to reflect growing confidence in the passage of the Inflation Reduction Act of 2022.
“Of all the names in our coverage, we believe FSLR appears positioned to benefit the most from the provisions of the Inflation Reduction Act that passed the Senate yesterday. Although there is still some potential uncertainly as to the legislation’s fate in the House, the odds of passage have improved considerably, in our judgement,” the analyst wrote in a client note.
He argues that investors “have not fully digested how transformational the IRA could be for FSLR’s business".