Barack Obama was elected president. He has made clear his support for clean, renewable energies like solar power.
Third quarter earnings per share were $1.20, 19 cents higher than analyst estimates. Through a five-year contract with SolarCity Corp., First Solar also announced that it will enter the U.S. residential market for solar panels.
A positive analyst on First Solar rating combined with concerns over higher oil prices drove the stock higher.
First Solar Inc. shares surged Thursday after the company reported a significant increase in third-quarter profit, raised its sales outlook for 2007 and provided 2008 revenue guidance above Wall Street expectations.
First Solar shares rose $57.31, or 34.3 percent, to $224.43 Thursday. The shares hit an all-time high of $230 earlier in the session.
CIBC World Markets Corp. analyst Adam Hinckley lifted his rating on the shares to "Sector Outperformer" from "Sector Performer."
First Solar's "impressive third-quarter results proved that management has many levers to pull to positively surprise the Street," Hinckley wrote.
Goldman Sachs expects that the demand for solar energy will exceed supply. Also, the government has been continuously supporting the solar energy efforts in the country. Even in the case of solar oversupply (which is possible in mid-2008), First Solar can expect a good earnings growth as it has a low production cost and high manufacturing efficiency. These positive indications about the market and a ‘Buy’ rating from Goldman Sachs resulted in a rise in the First Solar stock.
First Solar was upgraded from ‘hold’ to ‘buy’ by a few analysts, who said that the company has a strong technology and it is rightly priced after a slide during the previous week. Further, the company has a pipeline of contracts worth $4.3 billion for the next five years and is supported by favorable prices and cost structure.