On Tuesday, UBS maintained a positive stance on First Solar (NASDAQ:FSLR) shares, raising the price target to $270 from $252 while keeping a Buy rating.
The firm's outlook for the company is based on significant expected growth in earnings per share (EPS) and gross margins, as well as the anticipated benefits from U.S. tax credits.
First Solar's EPS is projected to increase from $7.74 in 2023 to an estimated $36.74 by 2027. The company's gross margin is also expected to improve substantially, from 39% in 2023 to 64% in 2028, factoring in the advantages of domestic manufacturing tax credits from the U.S. Inflation Reduction Act (IRA). UBS anticipates that First Solar's net cash will exceed $115 per share by 2028.
The firm recognizes First Solar as a differentiated technology company that stands to gain from the robust underlying demand for its products. The analyst believes that the company's valuation merits a higher multiple due to these positive factors.
Additionally, UBS highlights First Solar's potential as an underappreciated beneficiary of the growing demand for AI-driven electricity.
Large technology companies are increasingly committing to 100% renewable energy policies, often matching their nonrenewable electricity use with Power Purchase Agreements (PPAs). Understanding these corporate renewable policies is deemed crucial to comprehending the investment case for First Solar.
UBS suggests that those interested in First Solar's market prospects should also consult their report on 100% renewable-powered AI data centers, which provides further insight into how these sustainability policies are being implemented and their relevance to First Solar's business.
InvestingPro Insights
As UBS maintains a bullish outlook on First Solar, real-time data from InvestingPro complements this perspective with a few notable figures. First Solar's market capitalization stands at a robust $21.02 billion, reflecting investor confidence in the company. The P/E ratio, a measure of the company's current share price relative to its per-share earnings, is at 18.93, with an adjusted P/E for the last twelve months as of Q1 2024 at 20.02, indicating how the market values its earnings growth potential.
InvestingPro Tips highlight that First Solar holds more cash than debt on its balance sheet, providing financial stability and flexibility. Additionally, analysts expect sales growth in the current year, which could further bolster the company's financial position. With revenue growth of 27.28% in the last twelve months as of Q1 2024, First Solar demonstrates a strong capacity to increase its earnings. Moreover, the company has been profitable over the last twelve months, which aligns with UBS's positive earnings outlook.
For those considering an investment in First Solar, there are even more InvestingPro Tips available that delve into the company's financial health and market performance. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription and unlock access to these valuable insights, including 9 additional tips that could guide your investment decisions.
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