Shares began gaining early in Wednesday's session, but active traders certainly could have caught at the least a significant part of the days gains. Shares opened at less than $60, shot up to $64 by roughly 10:00 a.m. EDT and then trended higher throughout the day, closing at $69.40. The stock was recently changing hands at about $70.26.
The catalyst was First Solar's announcement of positive forward guidance -- but not just for 2014. The company issued guidance for the next three years, and the estimates were enough to boost investor sentiment.
Investors had underestimated the company's prospects, and that's why the stock ripped 20% higher Wednesday and is gaining on Thursday.
So if you don't already own First Solar, what are you to do? Surely it's never a good idea to buy a stock that's up 20% in one day. At the same time, this new guidance means that shares were undervalued previously.
Personally, I would never try and chase a move like this. It's too drastic. In November, the stock topped out at $65, and despite the current strength early Thursday, maybe it will find resistance in the low $70s in the next week or so.
Prospective buyers may also get a hand if the broader market pulls back a bit in the next few weeks and drags First Solar down with it.
I would think that the previous top near $65 would be a great place to initiate a long position. Obviously, lower would be nicer, but I doubt we're going to see shares in the low $60s anytime soon.
For 2014, the company guided for earnings per share of $2.20 to $2.60, on revenue of $3.7 billion to $4 billion. According to Yahoo! Finance, analysts were looking for EPS of $3.21 on sales of $3.77 billion.
Although earnings per share will likely be lower than they had expected for the year, analysts' sales prediction is now at the lower end of the company's range. That's bullish, especially in an environment where investors are craving top-line growth.