Goldman Sachs Goes All In on First Solar Stock
A short squeeze could be fueling the solar stock's rally
About a month ago, Goldman Sachs waxed optimistically over large-cap solar stocks. Today, the brokerage firm upped the ante, adding First Solar, Inc. (NASDAQ:FSLR) to its "Americas Conviction List," while reiterating its "buy" rating, and raising its price target to $75 from $64. The analyst in coverage glowed about the company's strong U.S. utility-scale development pipeline, as well as the capacity growth potential at its Malaysia 1 factory.
At last check, First Solar stock was up 5.7% to trade at $59.31, on track for its best day since Feb. 19, and extending its year-to-date lead to 40%. The shares have carved out a channel of higher highs and lows since late December, guided by their ascending 40-day moving average. And last week, FSLR toppled its 320-day moving average on a closing basis for the first time since July.
A short squeeze could be powering this surge. Short interest dropped by 6.4% in the most recent reporting period to 9.96 million shares, the lowest since early November. However, this still accounts for a healthy 13% of FSLR's total available float, and 7.4 days of pent-up buying power, at the average pace of trading.
Those wanting to speculate on First Solar should know that its Schaeffer's Volatility Index (SVI) of 29% ranks 4 percentage points from a 12-month low. In other words, volatility expectations appear low, suggesting it's an attractive time to buy short-term options premium.