Solaria Shares Climb on Favorable Spanish Data Center Rules, Analyst Backing

Shares in Spanish solar power developer Solaria (SLRS) surged as much as 7.3% on Tuesday, driven by a favorable regulatory change in Spain and a positive analyst note from Goldman Sachs.

Dual Catalysts Drive Rally

The primary catalyst for the stock's advance was the Spanish government's decision to relax energy regulations for data centers. This move is expected to boost demand for renewable energy sources to power these energy-intensive facilities, creating a significant growth opportunity for providers like Solaria.

Adding to the positive sentiment, Goldman Sachs reiterated its "buy with conviction" rating on the company. The investment bank's endorsement provided a further boost to investor confidence.

Analyst Sees Undervalued Fundamentals

In a note to clients, Goldman Sachs analyst Alberto Gandolfi maintained the firm's buy rating and a price target of €25 for Solaria. The analyst argued that the stock's recent decline in valuation did not align with the company's improving business fundamentals.

The note highlighted several positive factors supporting the investment case:

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• Installed capacity has nearly doubled over the past year.
• The company has made accelerated progress in battery development.
• New agreements with data centers are providing a fresh avenue for growth.

Goldman Sachs attributed the recent stock selloff to broader market factors, such as rising Spanish bond yields and the stock's correlation with artificial intelligence-related equities, rather than any company-specific issues.

Market Outlook

The regulatory shift for data centers is a significant development for Spain's renewable energy sector, potentially unlocking a new and substantial customer base for solar power. For investors, this creates a clearer path for Solaria to secure long-term power purchase agreements (PPAs).

Goldman Sachs also pointed to the company's upcoming investor day, scheduled for Nov. 19, as a potential source of new catalysts that could further support the stock's performance.