First Solar is well-positioned to fend off growing clean energy competition, according to Wolfe Research. Analyst Steve Fleishman upgraded the solar stock to an outperform rating in a note to clients Friday, citing an improving long-term outlook. He said First Solar’s weak third-quarter results and guidance cut also create an optimal entry point for investors. “Our concerns aren’t playing out,” he said. “We’ve expected a huge step-change in earnings for FSLR given the highly lucrative IRA credits and their incumbent advantage as the only large U.S. solar manufacturer. However, we also assumed competition would eventually come and credits would start to be meaningfully competed away in 2026 and beyond. Our view has changed.” Fleishman set a $170 price target on the stock, suggesting shares can rally nearly 30% from Thursday’s close. The stock has already surged more than 50% this year and 7% this month as investors set their sights on clean energy alternatives. Fleishman also views First Solar as a “uniquely positioned” clean energy stock in a rising-rate environment. “Visibility of cash flows is way above average when roughly half the cash will be coming from IRA tax credits tied to production and the company is almost fully contracted through 2026,” he wrote. First Solar reported quarterly results Thursday that fell short of analysts’ estimates, and cut its 2022 earnings per share guidance. While the stock may face more headwinds this year, Fleishman said the recent Inflation Reduction Act and its available tax credits should prove beneficial in the near term. “Overall, we see FSLR stock as a unique and direct way to play IRA benefits with potential for big near-term earnings upside surprises and an attractive valuation on cash flows,” he said. “Meanwhile, the core business is also improving with a surge of new bookings at increasing selling prices.” Shares of First Solar slipped 2% in premarket trading Friday. — CNBC’s Michael Bloom contributed reporting
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