After catching up with management, Roth MKM analyst Philip Shen like what he sees right now from First Solar (First Solar Stock Quote, Chart, News, Analysts, Financials Nasdaq:FSLR)
Shen described a recent webinar with the company and his takeaways from it.
“On 11/15, we hosted a webinar with FSLR’s CEO and CFO, Mark Widmar and Alex Bradley. During the webinar, we explored the outlook for FSLR’s bookings, pricing, FSLR’s technology roadmap, capacity expansion plans, among many other topics,” he wrote. “In our view, management sounded strong, fundamentals are healthy, and the narrative remains intact. The stock, however, remains disconnected from fundamentals, down ~27% from August highs vs. TAN down ~24% on negative sentiment, and is trading at just 12x our 2024 EPS ex-45X.”
In a research update to clients November 16, Shen maintained his “Buy” rating and one-year price target of $230.00 on FSLR.
The analyst thinks FSLR will post EPS of $1.25 on revenue of $3.52-billion in fiscal 2023. He expect those numbers will rise to EPS of $.46 on a topline of $4.63-billion the following year.
Shen says any way you slice it, FSLR is a cheap stock.
“With FSLR down ~27% from August highs vs. TAN down ~24% on negative sentiment, we see current levels as an attractive entry point from a valuation perspective. There is a material amount of value from the 45X credits over the coming decade, which we believe could represent $100/share. This implies that the base business is worth $55 at current levels and trades at only 12x our 2024 EPS ex-45X benefit. Before the IRA was passed in July of last year, FSLR’s stock was at ~$70. At current levels, the market is implying that not only has FSLR’s base business seen no growth in over a year, but has somehow contracted ~21% when fundamentals have only improved. We consulted our technical analyst, JC O’Hara CMT, CAIA, and looking through a bullish lens, we would be buyers on a pullback to $145, add on the breakout above $160, and target the 200 DMA at $185.”
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