First Solar Inc., the largest U.S. solar manufacturer, rose the most in more than 16 months after second-quarter sales jumped 65 percent and analysts at Cowen & Co. upgraded the shares.
First Solar rose 17 percent to $51.92 at the close in New York, the most since March 2014 and the biggest increase on the Standard & Poor’s 500 Index. First Solar’s gain led other solar companies higher including Canadian Solar Inc., which climbed 8.1 percent, and Renesola Ltd., up 7.1 percent.
Cost reductions, efficiency gains and Chief Executive Officer James Hughes’ efforts to diversify into international markets are beginning to pay off with new orders, said analysts led by Jeffrey Osborne at Cowen & Co.
“Production is maxing out with 2015 sold out and 2016 nearly sold out,” Osborne said in a note to clients Wednesday. “Current and forecasted revenue is on a strong upswing.” He upgraded his recommendation to the equivalent of buy from hold.
With 8point3 Energy Partners LP, which it formed this year with rival SunPower Corp, First Solar has a ready buyer for its power plants in the U.S. This model, often called a yieldco, is increasingly popular with investors because it can pay growing dividends with each new solar farm it adds.
Sales in the second quarter increased to $896 million from $544.4 million, Tempe, Arizona-based First Solar said in a statement Tuesday. That exceeded the $788 million average of nine estimates compiled by Bloomberg.
First Solar said the boost in sales was due in part to selling stakes in two California solar farms to 8point3, the 32-megawatt Lost Hills project and the 60-megawatt North Star power plant.
Net income was $94.5 million, or 93 cents a share in the second quarter, up from $4.5 million, or 4 cents a share, a year earlier. That was almost double the 50-cent average of seven estimates compiled by Bloomberg.
The company expects to ship as many as 2.9 gigawatts of panels this year, up from an April forecast of 2.6 gigawatts to 2.8 gigawatts this year.
That’s created greater-than-expected full-year revenue guidance of $3.5 billion to $3.6 billion and earnings of $3.30 to $3.60 a share, said Ben Kallo, an analyst at Robert W. Baird & Co. in San Francisco.
Guidance for 2015 “was significantly higher than expected, driven by strong expected revenue and margin,” Kallo said in a note to clients. He raised his 12-month price target to $69 from $66 and urged investors to be “aggressive buyers” of the shares. “Strong bookings and demand position First Solar for solid growth.”