Following up on yesterday's "First Solar Gets Some Love from Susquehanna, Price Target $180 (FSLR)"
The stock was showing a bit of strength in after-hours trade, finishing up another 50 cents to $127.25, on top of Friday's $3.11 gain.
As we said in Friday's post:
I don't have much info on the analyst's skill, this is an initiation after all but the comments have a nice new-age feel to them.The one concern I would have going into next week is the 200 day moving average, currently at $127.03.
Maybe we can all get together on the hill to watch the sun come up Monday morning.
On a more serious note Susquehanna's parent company, Susquehanna International Group is probably the largest privately held options trading firm in the world and the timing rather than the verbiage may be what's important here.*
Mitigating possible resistance at that level is the speed with which the stock fell last week, the SMA didn't provide much support on the way down and may not be the resistance point that is often seen when a stock spends considerable time churning around the line.
First up, CNBC:
Susquehanna Financial Group, which initiated a positive rating on First Solar Inc, said it likes owning December $125 FSLR calls to play for a potential near-term rebound. Shares of the top photovoltaic solar maker are down 11 percent on the week, and investors will be paying attention to its mid-December 2011 guidance event, according to the SFG report. "A short position in the name equal to 21 percent of the float could arguably exacerbate any positive momentum out of the guidance call," SFG's market intelligence team said.
While shares saw little volatility on this event last year, given the recent sell-off and the short interest position in the stock, SFG believes owning December calls could be attractive. Based on Thursday's closing stock price of $123.64, the calls could be purchased for $5.30, setting up a break-even of $130.30. SFG CleanTech analyst has a $180 price target, arguing that the company's strategy, balance sheet strength, and execution track record warrant a significant premium.And from Schaeffer's Research:
Traders Flock to First Solar Calls after Upbeat Analyst Note
Call volume has accelerated on First Solar, Inc. (We pointed out the short position in Wednesday's " ) today, with approximately 21,000 contracts crossing the tape so far -- nearly doubling the stock's average daily volume of about 12,000 calls. Checking out some of the day's major block trades, it looks like one speculator is betting on healthy short-term gains for the solar stock.Rejoice Longs: First Solar Still the Most Shorted Stock in the S&P 500 (FSLR)"
Specifically, the trader initiated a long call spread by simultaneously buying several large blocks of December 140 calls, and simultaneously selling an equivalent number of December 145 calls. The best-case scenario for this spread is for FSLR to settle squarely at $145 upon December expiration -- netting the maximum potential gain on the purchased calls, while the sold calls could be left to expire worthless.
Earlier today, brokerage firm Susquehanna recommended a more cautiously bullish approach on FSLR. The analysts initiated coverage of the shares with a "positive" rating, and recommended December 125 calls for traders looking to capitalize on a short-term bounce. In a note to clients, the brokerage firm said it has high hopes for FSLR's earnings guidance call in mid-December, and added that the stock's 21% short-to-float ratio could help to spark a major bullish move.
With FSLR's Relative Strength Index (RSI) docked at an anemic 29, the stock certainly looks due for an oversold bounce, at the least. Indeed, the shares are up about 2.5% at last check to trade near $126.72. Nevertheless, FSLR is currently poised to notch a Friday close beneath its 10-week and 20-week moving averages for the first time since mid-June.
Also this week:
First Solar Seems Headed for 200-day Moving Average on Credit Suisse Downgrade, Germany, Cramer (FSLR)