Despite A 40% Rise In First Solar Shares This Year, Analysts Advise Selling The Stock And Buying Sunnova Instead.

As a result of an analyst stating that the shares of First Solar FSLR -3.95% have run up so much that the benefits of the budget have already been priced into them, the stock prices were falling Monday.

‍

First Solar (ticker: FSLR) shares were downgraded by Morgan Stanley analyst Andrew Percoco from Equal Weight to Underweight on Wednesday.

‍

The Inflation Reduction Act (IRA) was passed by Congress last year, which resulted in many solar and clean energy stocks experiencing a surge. In recent months, several analysts have become quite bullish on the sector as a result of the implementation of the IRA, which grants certain tax benefits to solar manufacturers.

‍

There was a 3.9% decline in First Solar stock on Monday to $208.99, but the stock has soared 79% since the IRA was signed into law by President Biden on Aug. 16. Percoco explained the stock cannot climb much higher because it has already risen 40% this year.

‍

Percoco wrote in a research note, “[First Solar] is outperforming the rest of our clean tech coverage ... and, in our opinion, the IRA has already been priced in and is providing significant benefits for its investors.” Our team anticipates that competition will increase as domestic and international competitors expand in the U.S. going forward.

‍

A price target of $200 has been set by Percoco on the stock, an increase from $194, which was the previous target.

‍

According to Percoco, Sunnova Energy NOVA –1.73% (NOVA) will continue to rise in the market. In his first report for the year, he issued an Overweight rating for Sunnova. On Monday, the stock fell 1.4% to $15.41, making it a 14.5% decline since the beginning of the year. Sunnova is expected to increase its current share price by approximately 127% if Percoco sets a $35 price target for the stock.

‍

There is a significant underpinning to the strong long-term growth prospects of NOVA, including the exposure to a massively under-penetrated market (4% of U.S. homes), and its confidence in the market over the long term. Percoco warns there are some near-term risks, such as the slowdown in California demand following recent regulatory changes.

‍

This being said, we believe that it is a good investing opportunity for those willing to accept volatility for the near future," the analyst concluded.

‍

It was also announced by Percoco that he initiated coverage of Enphase Energy ENPH -3.51% (ENPH) at Equal Weight, while he also downgraded the price target on Plug Power PLUG -6.02% (PLUG) from Overweight to Equal Weight while slashing his price target to $15 from $35.

‍