By Sam Boughedda
First Solar (NASDAQ:FSLR) has been downgraded to Neutral from Overweight at JPMorgan, with the firm's price target on the stock raised to $190 from $147 per share.
JPMorgan analysts told investors the firm is downgrading the stock given its recent outperformance since the announcement of the Inflation Reduction Act.
"We view FSLR as the biggest near/medium-term beneficiary from the IRA's domestic manufacturing tax credits; however with the stock up >120% over the past four months, we believe the 'easy money' has now been made," said the analysts.
However, JPMorgan expects First Solar's bookings to remain strong and believe existing shareholders should maintain their positions, even though they expect the pace of First Solar's multiple re-rating to slow.
"Our Dec 23 price target goes to $190 from $147 based on a sum-of-the-parts of FSLR's core operations, plus anticipated value from manufacturing tax credits," added Strouse. "we estimate the value of manufacturing tax credits to be ~$71, based on a DCF, assuming that the ten-year credit is increasingly shared with customers on new bookings beginning in FY27."