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First Solar (NASDAQ:FSLR) wobbles between small gains and losses in Thursday's trading as J.P. Morgan upgraded the stock to Overweight from Neutral with a $220 price target, saying the recent pullback "tilts risk-reward favorably for a company that has the best visibility into medium-term growth prospects owing to a backlog that stretches into later this decade."
While acknowledging longer-term risks for First Solar (FSLR) from new U.S.-based manufacturing being incentivized by Inflation Reduction Act domestic content guidelines, JPM's Mark Strouse believes the stock presents near-term value given that the overall solar space has traded down largely due to rising interest rates and concerns over developer cost and access to capital in light of NextEra Energy Partners' reduced guidance.
Strouse highlighted utility-scale solar as his preferred exposure to alternative energy, particularly Array Technologies (ARRY), Shoals Technologies (SHLS) and Nextracker (NXT), ahead of upcoming earnings.
The analyst also said NextEra Partners' (NEP) decision to lower its targeted growth is unique to that company given concern since earlier this year over CEPF refinancing needs, which has led to a spiraling cost of capital, noting parent company NextEra Energy said project development plans are unchanged.