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Wednesday, BofA Securities affirmed their positive stance on First Solar (NASDAQ:FSLR), reiterating a Buy rating with a price target of $236.00. Currently trading at $161, the stock appears undervalued according to InvestingPro analysis, with analyst targets ranging from $190 to $360. BofA Securities highlighted First Solar’s technological advancements and production increases, noting the company’s exit from 2024 with a capacity of 21GW and plans to reach 35GW by 2026.
First Solar’s strategic positioning within the United States, coupled with a strong regulatory environment, was cited as a significant competitive advantage. With a robust financial health score rated as "GOOD" by InvestingPro and a healthy current ratio of 2.14, the company’s production capacity is fully committed through 2026. Despite acknowledging potential short-term obstacles such as project delays, contract cancellations, and supply imbalances that could affect performance in 2025, BofA Securities expressed confidence in the company’s growth trajectory, supported by the company’s strong 21.8% revenue growth over the last twelve months.
The firm anticipates that First Solar can navigate these challenges by optimizing its US production operations and reallocating international supplies to meet domestic demand. Operating with a moderate debt level and maintaining strong profitability with a 46.5% gross margin, this strategy is expected to be effective, especially if current domestic content policies remain in place, potentially leading to a more than 50% increase in production.
In their analysis, BofA Securities underscored the importance of First Solar’s US manufacturing base and regulatory moat in maintaining its competitive edge in the market. The company’s ability to redirect international supply to the US is seen as a key factor in supporting a significant production boost, provided that domestic content policies continue to support the industry.
The analyst’s commentary suggests a strong belief in First Solar’s capacity for overcoming the near-term challenges and capitalizing on its strategic advantages to achieve substantial growth. The reiterated price target of $236.00 reflects this optimistic outlook for the company’s future performance.
In other recent news, First Solar has reported its fourth-quarter 2024 earnings, revealing a miss on earnings per share (EPS) while exceeding revenue forecasts. The company posted an EPS of $3.65, falling short of the anticipated $4.83, but achieved revenue of $1.5 billion, surpassing the forecasted $1.49 billion. Analysts from BMO Capital, Piper Sandler, Truist Securities, and Citi have all adjusted their price targets for First Solar, reflecting the company’s recent financial performance and market conditions. BMO Capital reduced its target from $260 to $230, maintaining an Outperform rating, and cited concerns about 2025 gross margin guidance. Piper Sandler also lowered its target to $230, retaining an Overweight rating, while Truist Securities adjusted its target to $285, keeping a Buy rating. Citi revised its target to $236, maintaining a Buy rating, following First Solar’s revenue performance slightly above consensus but a miss on gross margin. These developments highlight the mixed financial results and ongoing challenges First Solar faces, including policy uncertainties and international market access.
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