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The recent pullback in First Solar shares has created an attractive entry point, according to BMO Capital Markets. Analyst Ameet Thakkar upgraded shares to outperform from market perform. He maintained his price target of $237 on shares, which suggests 39% returns from Wednesday’s close. “FSLR stock has declined by an unwarranted degree following its recent Analyst Day in our view. As highlighted in our Analyst Day recap note earlier this week, we believe consensus 2024-26 estimates are too low, but remain focused on 2027+ earnings power where FSLR is not fully sold out,” Thakkar said in a Thursday note. “However, at its current share price of $170.50, and even using our conservative assumptions for declines in ASPs and utilization rates, we see attractive risk/reward on “normalized” post 2026 adj. EBITDA,” he continued. Shares of the solar company have tumbled 18% since its second-quarter earnings call. By comparison, the S & P 500 has declined 3% over the same period. Underperformance has accelerated since the company’s positive analyst day on Sept. 7, with the stock losing about 5% since. BMO views First Solar as a winner under the Inflation Reduction Act, which it believes will help the company’s earnings power. A backlog will continue to grow thanks to the IRA, as developers try to secure U.S.-produced solar modules — notably, First Solar is the only significant domestic producer, Thakkar noted. “FSLR’s current backlog, ASPs, and PTC leverage already offered substantially better visibility than most of its peers. However, we now appear to have more clarity on 2024-26 earnings, upside to consensus, and another sign progress on 2027+ continues likely at favorable pricing,” the analyst said. Shares rose 2% Thursday before the bell. The stock is up almost 14% in 2023. —CNBC’s Michael Bloom contributed to this report.
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