First Solar (NASDAQ:FSLR) shares rose 0.8% in pre-market trading after KeyBanc upgraded the solar technology company to Sector Weight from Underweight, citing valuation following the stock’s year-to-date decline.
KeyBanc described the change as a valuation-based decision rather than a revision to its fundamental view of First Solar. The shares have declined about 32% since the start of the year, compared with a gain for the S&P 500 and a smaller decline for the TAN solar index.
The brokerage said First Solar’s share price had moved sufficiently close to its previous price target to warrant removing its Underweight rating.
KeyBanc Points to Tax Credits and Cash
As part of its valuation assessment, KeyBanc estimated that First Solar’s advanced manufacturing tax credits and cash have a combined value of approximately $135 per share.
The firm cited those assets as part of its assessment of the company’s valuation following the recent decline in its shares. First Solar reached a new 52-week low of $170.80 on September 24.
The rating change does not represent a more positive fundamental outlook from KeyBanc, according to the firm, but reflects the difference between First Solar’s current share price and the valuation level underpinning its previous Underweight recommendation.
First Solar Moves Higher as Broader Markets Decline
The shares advanced in pre-market trading while major U.S. equity futures moved lower. S&P 500 futures declined 0.5%, Dow Jones futures fell 0.4% and Nasdaq futures were down 1.0%.
The broader market moves came amid renewed tensions in the Middle East and elevated U.S. Treasury yields, with the 10-year yield above 5%. Higher yields can affect valuations across rate-sensitive sectors, including solar companies.
Investors are also awaiting several U.S. economic releases during the coming week, including PCE inflation figures, revisions to gross domestic product data and the September employment report.
The releases could provide additional information on inflation, economic activity and the outlook for U.S. interest rates.
First Solar stock price
