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On Thursday, Barclays (LON:BARC) analyst Christine Cho reaffirmed an Overweight rating on First Solar (NASDAQ:FSLR) shares, with a steady price target of $236.00. According to InvestingPro analysis, First Solar currently appears undervalued, with a "GREAT" overall financial health score. The company’s P/E ratio of 10.6 is particularly attractive given its growth prospects. The focus of the discussion centered around the newly implemented tariffs and their potential impact on the company’s operations. First Solar imports solar modules from its facilities in Vietnam, Malaysia, and India, facing tariffs of 46%, 24%, and 26% respectively. Notably, steel and aluminum have been excluded from these reciprocal tariffs. Despite these challenges, InvestingPro data shows analysts expect robust revenue growth of 32% for fiscal year 2025, suggesting strong underlying business fundamentals.
For 2025, First Solar’s guidance anticipated importing approximately 2 gigawatts (GW) from India and 6 GW from Southeast Asia into the United States. The higher tariffs on Vietnam could lead to a shift, with an estimated 3.7 GW coming from Malaysia and about 2.3 GW from Vietnam. Cho’s preliminary calculations suggest that these tariffs could result in an annualized financial impact just shy of $500 million and roughly $375 million for the period between April and December 2025, assuming production is evenly spread across all quarters.
However, Cho mentioned there might be mitigating factors to consider. During a webinar with First Solar’s CFO Alex Bradley on March 17, 2025, it was revealed that contracts in the company’s backlog typically include provisions regarding the responsibility for tariff risks, although these terms vary. Some contracts allow for shared risk, with one party covering the initial percentage of a tariff and the other taking on any excess. In extreme tariff situations, either side may have the option to terminate the agreement, unless the other party chooses to cover the additional cost, allowing the contract to remain in place.
Another potential mitigating strategy discussed by Cho involves adjusting import sources. First Solar’s guidance assumes 1 GW of its Indian production will be sold domestically, with 700 megawatts (MW) not yet under contract. Given the new tariffs, it could be beneficial for First Solar to export more modules from India to the US, thereby reducing the volume produced in Vietnam, where tariffs are significantly higher. This approach could potentially mitigate around $30 million of the forecasted tariff impact. The company’s strong financial position, evidenced by a healthy current ratio of 2.45 and more cash than debt on its balance sheet, provides flexibility to navigate these challenges. For deeper insights into First Solar’s financial metrics and growth potential, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, First Solar has been the subject of several analyst updates and strategic developments. Truist Securities adjusted its price target for First Solar to $245, maintaining a Buy rating, with the firm expressing optimism about the company’s long-term prospects despite short-term policy uncertainties. Similarly, Jefferies increased its price target to $202, also maintaining a Buy rating, while noting potential margin pressures in the near term. Barclays revised its price target down to $236 but kept an Overweight rating, highlighting production expectations across First Solar’s global facilities. Mizuho (NYSE:MFG) Securities reduced its price target to $252 and maintained an Outperform rating, citing the company’s recent fourth-quarter results and 2025 revenue guidance.
In terms of strategic moves, First Solar has partnered with Everstream Analytics to enhance its supply chain resilience. This collaboration aims to provide First Solar with advanced risk management capabilities to mitigate geopolitical and weather-related disruptions. The partnership underscores the company’s commitment to maintaining robust supply chain operations amidst global challenges. These recent developments reflect First Solar’s ongoing efforts to navigate the evolving landscape of the renewable energy sector.
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