First Solar Inc. (NASDAQ: FSLR) has had a hard time since earnings were released last week. While not too many analysts have stuck their neck out, the independent research firm Argus has said that sell-off has been overdone. The firm maintained its Buy rating and its $79 price target. This represents an implied upside of more than 50% — and closer to 60% upside considering that the stock’s weakness has persisted on Wednesday.

Argus sees First Solar having continued strong growth prospects ahead. First Solar’s third-quarter revenue of $889 million was down 30% year-over-year, but it was up 63% sequentially. Excluding a one-time tax benefit, the company earned $0.61 per share. This was down from $2.28 per share in the prior year but was up from $0.04 per share in the second quarter. While this was shy of the consensus estimate of $0.64, it did beat the Argus estimate of $0.60 per share.

The long and short of the matter is that First Solar shares had already fallen about 10% right after earnings. Argus thinks this reaction was a disappointment that management decided not to spin out the company’s utility-scale generation assets into a “yieldco” that would pay out most cash flow to investors in the form of dividends. Management did not expect to miss out on market opportunities by deciding against a yieldco spinoff, and it would instead continue to hold projects on its balance sheet through first commercial operation.

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The Argus report said:

In our view, management believes that its current strategy will create the most long-term value for shareholders. We also do not believe that First Solar needs the yieldco structure as a source of alternative financing given its strong balance sheet, with no debt and approximately $900 million in net cash. … We view Fist Solar as the best-positioned company in the solar industry based on three factors.

The first factor is that it has been able to remain profitable, even as its peers have been hurt by oversupplied markets and a lack of pricing power. Second, it is again focusing on investing in its cadmium telluride technology, which should provide a cost advantage relative to more commoditized technologies like polysilicon. The recent acquisition of GE’s cadmium telluride intellectual property portfolio has further enhanced its abilities in this area. Third is a solid balance sheet and that it is cash flow positive.

As far as the $79 target and on future tax credit issues, the report further said:

In our view, First Solar will likely be the only solar power player to generate positive cash flow over the next three years. That said, we expect quarterly earnings to be “lumpy” due to the timing of revenue recognition and project sales, and would not place too much emphasis on variations in quarter-to-quarter results. We believe that one of the company’s key growth drivers over the next two years will be an anticipated step-down in the U.S. investment tax credit for solar projects from a current 30% to 10% in 2017. We expect the reduced tax credit to pull demand forward into 2015 and 2016. First Solar is preparing for higher demand by boosting its module manufacturing capacity by 46% next year. Over the long term, we expect the adoption of First Solar’s technology to increase both in the U.S. and overseas as it becomes more cost-competitive with other sources of powergeneration and more countries look to diversify their power sources.

We think that Fist Solar’s efforts to produce more efficient modules and utility-scale systems will enable its technology to become economically competitive with other power sources, especially for peak-load generation. In addition, thanks to its efficiency initiatives, the company should be able to reduce its reliance on subsidies, which have declined rapidly over the last two years. It should also benefit from stricter environmental regulations on fossil-fuel-based power, and increased government and public support for clean energy.

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Argus called First Solar inexpensive on an absolute basis and by historical standards based on ratios such as price to earnings, price to sales and price to book. Still, it trades at a premium due to its profitability. It is also cited as having $897 million in net cash, which represents around 17% of its current market cap — about $12 per share.

Here is what Argus noted about the yieldco structure that would be similar to a real estate investment trust (REIT) or master limited partnership (MLP):

It would pay out most cash flow to investors in the form of dividends. As in the case of REITs and MLPs, the yieldco structure eliminates the double taxation of dividends faced by investors in a typical C-corp, and tends to lower the cost of capital. The yieldco structure has been a popular method for solar companies to attract a new group of investors. Other solar companies that have used the yieldco structure, such as SunEdison’s spinoff of TerraForm Power, have added to shareholder value as the spinoff IPOs have been heavily oversubscribed. In most cases, the parent company continues to hold a majority stake in the yieldco and benefits from an increase in the yieldco’s market valuation. The parent company can also drop assets down to the yieldco to raise cash.

Investors do not generally review firms such as Argus for breaking news research reports. This, along with an overdue broad market correction, is why shares have not bounced at all. In fact, First Solar shares were down nearly 3% at $49.48 in early afternoon trading. The current price and that $79 price target compare to a 52-week trading range of $47.04 to $74.84 and to a consensus analyst price target that is closer to $63. The highest analyst price target for First Solar on Wall Street is $87.

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