First Solar Rises on Goldman Upgrade of Strong Balance Sheet

Updated on
  • Company raised to buy from hold with $100 price target
  • SolarEdge also expected to gain on demand for rooftop power

First Solar Inc. climbed to a 15-month high after Goldman Sachs Group Inc. analysts raised their rating and price target and said the company has “the strongest balance sheet” in the industry.

First Solar rose 8 percent to $72.03 at the close in New York, the highest since September 2014. The company’s market value swelled 48 percent last year, the best performance for a solar company tracked by Goldman, according to a research note Tuesday.

First Solar is well positioned with $1.8 billion in cash and equivalents and less than $300 million in total debt at the end of the third quarter, analysts led by Brian Lee said in the note. That will give the company an advantage over competitors as state and federal incentives boost the U.S. market.

“We believe this positions the company better than peers to navigate short-term tightening in financial conditions and maintain a relatively low cost of capital,” Lee said. “No developer has more offensive firepower than First Solar heading into the next several years.”

SolarEdge Technologies Inc. , a manufacturer of inverters used in rooftop solar systems, is also expected to do well this year, Lee said. SolarEdge has beat earnings estimates in each quarter since its initial public offering last year and its components are also well-positioned to supply the growing market for energy-storage systems. Energy storage demand will increase as system costs decline 41 percent by 2020, according to GTM Research.

SolarEdge rose 5.3 percent to $29.49. The shares have gained 64 percent since they began trading in March at $18 each.