Shares of solar giant First Solar (NASDAQ:FSLR) jumped 19.2% in January, according to data provided by S&P Global Market Intelligence, as investors rushed back into solar stocks. After the stock lost 37.1% of its value in 2018, the pop was welcome news for shareholders.
The first bit of good news came when Goldman Sachs upgraded First Solar’s stock from neutral to a buy rating, increasing its price target from $48 to $57 per share. Analyst ratings don’t make a stock a great buy by themselves, but they can reinforce your investment thesis and will often move stocks short term.
Image source: First Solar.
It didn’t hurt that the stock market overall rose in January and the Federal Reserve indicated that it wouldn’t raise rates as quickly as previously expected. Interest rates in particular are a risk for First Solar because higher rates lower the value of projects it builds, so the tone on low rates in 2019 is good news.
There wasn’t any news that fundamentally changed the investment thesis for First Solar in January, but that’s not always required to move a stock. The more meaningful news will come on Feb. 21 when management will report fourth quarter results and give a guidance update for 2019. Investors will want to watch for the pace of bookings, gross margins, and any competitive pressure that may be hitting the company now that commodity solar panels have excess capacity. Despite the strong start to the year, First Solar has a lot of questions to answer early in 2019.