Goldman Sachs [$GS] axed First Solar’s [$FSLR] rating down to a Sell with an $81 price target, seeing a 16% drop from Monday’s closing price after jumping 61% in 2020. Simultaneously, Goldman upped Enphase Energy [$ENPH] to a Buy with a $232 price target, a 32% gain from Monday’s close after increasing 513% in 2020.
“It’s a tale of two growth stories”, the bank said. First Solar’s earnings and revenue have already topped for this cycle, Goldman analyst Brian Lee said in a note on Monday. Margins are expected to touch highs in the first half of 2021. Here’s Why Plug Power Has Gone Parabolic Since June
First Solar is estimated to report year-end 2020 profit of $3.62 a share, but the outlook for year-end 2021 is $3.44. Year-end revenue is forecasted to be $2.8 billion, which is running marginally below the $3 billion forecast for year-end 2021.
Goldman sees ebbs in earnings per share for First Solar starting next year, “further exacerbated by weaker industry pricing moving through next year, as we see the supply-demand dynamic in modules as one of the more challenged areas of the supply chain in the near-to-medium term.” Imagine Owning This Energy Stock Throughout The Pandy
Shares of the Tempe, Arizona-based panel maker fell 9% to $92.16 on Tuesday, compared to a 0.7% gain in the S&P 500 index. Conversely, Enphase is in an earlier stage of growth, Lee said. Its market could swell to $14 billion from $2 billion, with annual growth in earnings per share of about 56%. Shares of Enphase crept up 5.3% to $181.48 on Tuesday.
Canadian Solar [$CSIQ] carries a Neutral rating at Goldman, which elevated its price target on the stock to $48 from $43. The analyst projects 2020 earnings per share of $1.27, falling to 35 cents for 2021. Shares of Canadian Solar tumbled 4% to $50.52 on Tuesday.
Goldman remains positive on solar stocks, especially given the policy backing by the incoming Biden administration, who has committed to spend $2 trillion on renewable energy initiatives, including the installation of 500 million panels by 2026. QuantumScape is Up 593% Since October; Normal?
What’s more, Congress’ newly approved spending authorization extended a solar investment tax credit. Global solar installations are predicted to snowball 18% this year and an average of 17% annually through 2024. Supply (an additional 120 gigawatts) is seen outpacing new demand (25 gigawatts), a potential risk. One gigawatt can power about 750 homes.
Goldman noted that solar stocks did better than historical averages last year, especially in Q3, because of the swift “V-shaped recovery” in the U.S. market, optimism around the potential for policy catalysts, and the expectations for faster solar volume growth under a Biden administration, Goldman’s Lee mentioned in the note. “We believe the current set up, combined with momentum in demand, is likely to keep investor sentiment largely positive heading into 2021,” he said. Nikola is Officially a Nonstarter