Nextracker soared past a buy point on the eve of its earnings report, as First Solar and other solar-power stocks also rallied after lawmakers proposed tax credits more favorable than the industry expected.
J.P. Morgan analyst Mark Strouse said in a research note that details on tax credits from the House Ways and Means committee match or exceed the more bullish end of investor expectations for clean-energy providers.
"Our first take is a clear positive against very low expectations, though we caution that the bill is merely the first step in the process and that potential changes are still possible as the bill navigates broader Congress," Strouse wrote.
Most tax credits are being left unchanged through 2028, gradually falling to zero in 2032. The bill puts limits on products sourced from banned "foreign-influenced entities." That could be a positive for First Solar, which gets much of its business from tax incentives targeting domestic production.
While the bill favors First Solar the most, Strouse said it is also positive for Array Technologies, Nextracker, Enphase Energy and SolarEdge Technologies.
Array shares jumped 22% in midday trading. Enphase and SolarEdge, however, fell 7.3% and 3.9%, respectively. Both stocks remain in long downtrends.
Solar Power Stock Gaps Up
Shares of Nextracker ran up more than 9% in heavy volume, though they were off morning highs. The stock gapped above the 52.27 buy point of a cup base, meaning that the first five-minute high at 56.65 Tuesday serves as a more realistic entry. Shares were at 55 in midday trading.
Nextracker, which makes systems that maximize the use of solar rays, reports March-quarter results Wednesday after the market close. Analysts' consensus earnings estimate is 97 cents a share, an increase of 1%, according to FactSet. Sales are expected to climb 13% to $829.8 million.
Nextracker has an IBD Composite Rating of 87, the highest of 29 stocks in IBD's solar energy industry group.
The stock has a 21-day average true range (ATR) of 4.99%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs. There are exceptions, but given current market conditions, IBD generally suggests investors keep most of their portfolio focused on stocks with ATRs at or below 6%.
First Solar Gaps Up 18%
First Solar gapped up more than 19% in heavy volume, rising above its 200-day moving average for the first time since Nov. 5. The provider of solar modules is having its best day since May 22, 2024, when it rose 18.7%.
Shares are up more than 45% in a five-day win streak, according to Dow Jones Market Data. With this week's gains, First Solar is now up nearly 6% for the year. It has a Composite Rating of 43. Its ATR is 6.32%.
Shoals Technologies rallied more than 14% in big volume. Shares are trying to break above resistance at the 6 price level. The maker of electrical components for solar systems has a 63 Composite Rating. The ATR is 7.68%.
Sunrun jumped more than 15% and also recaptured its 200-day moving average. The home installer of solar power systems started rising when it reported first-quarter earnings on May 7. Its Composite is 78. The average true range is 8.85%.
Tuesday's tax-credit news provided a big lift to the solar power industry, which has been worried about incentives, tariffs and other issues.
