Solar stocks shot out of the gate today with a strong performance, enlivening an otherwise dour environment on Wall Street. Specifically, First Solar (NASDAQ:FSLR) just announced that it is acquiring Evolar, a perovskite tech specialist that provides thin film photovoltaics (PVs). FSLR stock is popping roughly 24% higher as a result.
According to ScienceDirect, PV panels produce electricity directly from sunlight. Therefore, improved tech in this arena has significant implications for solar stocks. In addition to First Solar, shares of Enphase Energy (NASDAQ:ENPH) and SolarEdge Technologies (NASDAQ:SEDG) are gaining more than 2% and 1%, respectively.
In the accompanying press release, First Solar’s purchase price for Evolar came out to about $38 million. What’s more, another $42 million may be paid “subject to certain technical milestones being achieved in the future.” The impact to First Solar’s operating expenses for 2023 may also reach approximately $2 million to $4 million, “excluding the impact of purchase price accounting.”
First Solar CEO Mark Widmar said in the announcement:
“With this acquisition, along with our new innovation center in the United States and longstanding commitment to R&D, we are investing not just in First Solar’s future, but the future of solar energy […] We anticipate that high efficiency tandem PV modules will define the future, speeding up decarbonization by allowing us to convert sunlight into clean electricity more efficiently.”
Significant Fundamental Upside for FSLR and Other Solar Stocks
Fundamentally, Evolar’s thin film PVs should help expand green and renewable energy solutions, making solar accessible to more households. Therefore, while FSLR stock understandably benefits the most from this announcement, the broader implications offer tailwinds for other solar stocks.
Per the press release:
“The acquisition is expected to accelerate the development of next generation PV technology, including high efficiency tandem devices, by integrating Evolar’s know-how with First Solar’s existing research and development (R&D) streams, intellectual property portfolio, and expertise in developing and commercially scaling thin film PV.”
Additionally, Evolar’s lab in Uppsala, Sweden will continue to conduct research activity as part of the deal. This arrangement marks the first time that First Solar will have a research and development facility in Europe. Following the closing of the deal, about 30 of Evolar’s R&D staff will also transition to First Solar. These employees will work “in close collaboration with the company’s team of about 60 scientists at its advanced research technology center in Santa Clara, California.”
According to Investor’s Business Daily, enthusiasm around the deal has helped rejuvenate technical sentiment. The outlet reports that today “FSLR stock cleared resistance around 220 and regained its 50-day moving average for the first time since late April.”
Why It Matters
At time of this writing, TipRanks notes that analysts peg FSLR stock as a consensus “moderate buy” based on 22 opinions. This assessment breaks down to 12 buys, eight holds and two sells. However, the average price target for shares now sits at $222.20, implying downside of more than 1%. That suggests FSLR may be overstretched.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
