First Solar Rallies As Credit Suisses Turns Bullish; $150 Target

First Solar (FSLR) shares are on the rise this morning after Credit Suisse analyst Satya Kumar upped his rating on the stock to Neutral from Outperform, with a new price target of $150, up from $110. He contends that upside in pricing for Q2 and Q3 is not yet reflected in the stock.

Kumar offers a four-part thesis for his upgrade of the solar company’s shares:

• He sees upside to estimates, and today raised his 2010 demand estimate to 13 GW from 12.7 GW, and says strong demand should reduce price erosion.
• Risks to long-term margins are diminishing, he contends. Easy cost reductions for rival silicon-based solar companies – in particular lower poly prices, outsourcing to China and vertical integration – have mostly been accomplished.
• Long-term growth prospects remain intact; he says 2011 might not be as bad as feared, particularly in Germany; he thinks U.S. demand could surprise positively.
• FSLR’s panel efficiencies should “inflect meaningfully higher” by Q4 of this year or Q1 of next year, he contends.

Kumar raises his 2010 EPS estimate to $7.53, from $6.79; the Street consensus is $6.93. For 2011, he goes to $8.32, from $7.34.

FSLR is up $6.23, or 5.3%, to $125.