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UBS upgraded FSLR to “buy” from “neutral”

According to UBS, First Solar, Inc. (NASDAQ:FSLR) could be a major beneficiary of the Inflation Reduction Act’s (IRA) manufacturing tax credits. The firm upgraded FSLR to “buy” from “neutral,” and raised its price target to $250 from $140, noting it could add more than 25% thanks to IRA credit tailwinds. In response, First Solar stock was last seen 2.6% higher at $203.39.

The security is trading at its highest level since 2009, with shares also pacing for their fifth-straight daily win, as well as their best weekly gain since November. Year-over-year, FSLR is up 203.3%.

Evercore ISI and Goldman Sachs also weighed in on the solar stock recently, hiking their price targets to $192 and $260, respectively, before yesterday’s open. There’s room for more analysts to join the bullish bandwagon, as eight of 21 in coverage still rate the equity a “hold,” while the 12-month consensus target price of $185.03 is a 9.6% discount to current levels.

An unwinding of pessimism could bode well for First Solar stock, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity’s 50-day put/call volume ratio of 1.29 sits higher than 85% of annual readings.

Echoing this, FSLR’s Schaeffer’s put/call open interest ratio (SOIR) of 1.97 stands in the 87th percentile of the past 12 months, indicating a put-bias amongst short-term options traders.

A shift seems to be taking place, with 24,000 calls traded so far today, or six times the intraday average volume, compared to 13,000 puts. New positions are opening at the three most popular contracts — the weekly 3/3 210- and 205-strike calls, and the 200-strike put.

Those looking to join in on the action should consider options. The stock’s Schaeffer’s Volatility Index (SVI) of 46% stands higher than just 11% of reading from the past year, which shows options traders are pricing in low volatility expectations at the moment — a boon for premium buyers. 

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