Robinhood shares gain on Q2 beat, as user and crypto growth accelerate
On Thursday, BMO Capital Markets adjusted their stance on several solar energy stocks in response to recent amendments to the "One Big Beautiful Bill Act." Analysts at BMO have expressed concern that the current version of the legislation would significantly restrict, if not entirely eliminate, residential solar Investment Tax Credits (ITCs) for leases, also known as third-party ownerships (TPOs). This extends beyond the previous version’s elimination of 25D credits. The solar sector has been experiencing significant volatility, with First Solar’s stock showing a notable decline of about 12% in the past week, according to InvestingPro data.
BMO reiterated its Underperform ratings on SolarEdge Technologies Inc . (NASDAQ:SEDG), Enphase Energy Inc . (NASDAQ:ENPH), and has now downgraded Sunrun Inc . (NASDAQ:RUN) to Underperform as well. The amendments to the bill were made public late Wednesday evening, and the bill remains subject to further changes by the Senate.
The analysts also noted that section 48E/45Y of the bill introduces technology-neutral ITCs/Production Tax Credits (PTCs) for utility-scale solar projects, with a hard phase-out set for 2028. The interpretation of the amendments by BMO suggests that developers will have to claim safe harbor status within 60 days of the bill’s enactment to be eligible. This development is seen as negative for utility-scale solar companies such as NextEra Energy Inc (NYSE:NEE). (NYSE:NXT), Array Technologies Inc . (NASDAQ:ARRY), and First Solar Inc . (NASDAQ:FSLR) compared to the previous draft of the bill.
Despite the overall negative outlook for the sector, BMO maintained an Outperform rating on First Solar Inc. (NASDAQ:FSLR). The firm believes that the absence of changes to the 45X and Anti-Dumping/Countervailing Duties (AD/CVD) provisions should keep First Solar in an advantaged position. InvestingPro data shows First Solar maintains strong fundamentals with a healthy gross profit margin of ~44% and operates with minimal debt, as evidenced by a debt-to-equity ratio of just 0.08. According to InvestingPro’s Fair Value analysis, the stock currently appears undervalued.
The legislative process is ongoing, and the final form of the bill is yet to be determined. Market participants are closely monitoring these developments as they have significant implications for the solar energy industry. For deeper insights into First Solar’s valuation and 8 additional exclusive ProTips, including detailed analysis of the company’s financial health and growth prospects, visit InvestingPro, where you’ll find comprehensive research reports and expert analysis covering 1,400+ US stocks.
In other recent news, First Solar has seen a series of updates from various analyst firms regarding its stock performance. Goldman Sachs recently raised its price target for First Solar to $255, highlighting the potential benefits from favorable trade policies and tariff relief. However, earlier, Goldman Sachs had reduced the target to $204 due to uncertainties surrounding tariffs, although it maintained a Buy rating. UBS also increased its price target to $255, citing confidence in the continuation of Advanced Manufacturing Production tax credits, which are likely to remain intact in the Republican budget.
Piper Sandler maintained its $205 target, emphasizing First Solar’s solid performance in the face of tariff challenges and strong power demand. Wolfe Research upgraded First Solar to ’Outperform’ with a price target of $221, attributing this to the benefits from the Inflation Reduction Act and anti-China sentiment. Despite the upgrade, Wolfe Research noted potential risks such as warranty issues and emerging competitors. These developments indicate that analysts are closely monitoring First Solar’s ability to navigate current challenges and capitalize on legislative and market opportunities.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.