After A 40% Surge, Deutsche Bank Downgrades This Solar Energy Stock

As First Solar's stock price has soared in recent weeks, Deutsche Bank says it's time for investors to take a bit of profit in the stock.

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After an increase of 39% and 42% since November, First Solar shares have been downgraded by analyst Corinne Blanchard from buy to hold. According to Blanchard, the stock is extremely expensive after rallying by 39% and 42%. Blanchard reportedly increased the price target for the stock from $190 per share to $230 per share. This price target implies a 10.6% rise in the stock's price.

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As Blanchard explained to his clients in a note he sent to clients on Wednesday, "We believe that now is a good time for investors to look for a risk-reward investment elsewhere." As a result of a strong backlog throughout the coming years, and an improved average selling price, we remain positive about the company's fundamentals. As a result, we believe the current stock price represents an expensive entry point for investors; a value range below $200/share would be much more attractive to us." 

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Adding more capacity to the company's solar panel manufacturing facility will allow the company to take advantage more of the tax credits from the Inflation Reduction Act by utilizing more of its expanded manufacturing facilities. This is what Deutsche believes will be a catalyst for the stock price to go up in the near term as a result of such an announcement. According to Blanchard, although such a development could happen in the future, it is not certain at the moment. 

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In the event that the share price of the company was to see a significant reduction, Blanchard said he would look to become more constructive.

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As part of its long-term buy recommendation of solar energy companies, Deutsche Bank named Enphase Energy as one of its top picks. Additionally, ahead of the company's first-quarter earnings report, the firm initiated a short-term catalyst buy rating as well. On April 25, Enphase Energy is expected to make its earnings announcement, followed two days later by First Solar.

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