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On Wednesday, BofA Securities adjusted their outlook on First Solar shares (NASDAQ:FSLR), reducing the price target to $185 from $215, while continuing to endorse the stock with a Buy rating. The revision follows First Solar’s announcement of a weaker-than-expected performance in the first quarter and a significant reduction in their 2025 guidance, which has been affected by tariff-related uncertainties in Southeast Asia (SEA). According to InvestingPro data, the stock has declined nearly 30% over the past six months, though analysis suggests it remains undervalued at current levels.
The analyst from BofA Securities highlighted the company’s decision to cut up to 2.5 gigawatts (GW) of potentially uneconomic volume from its guidance and to halt production in Malaysia and Vietnam during the second half of 2025. This move was described as a demonstration of disciplined execution and risk mitigation by the company. Despite these challenges, InvestingPro data shows First Solar maintains strong financial health with a current ratio of 1.93 and more cash than debt on its balance sheet.
Despite the lowered guidance, the analyst reiterated the Buy rating, pointing to First Solar’s substantial backlog of 54 GW that is not subject to exposure, its strong liquidity position, and the potential long-term (LT) benefits from the alignment with the Inflation Reduction Act (IRA) and possible Future Energy Outlook Conference (FEOC) regulations. These factors are believed to support the company’s upside potential, particularly as the ramp-up of wafer and cell production in the U.S. remains slow and uncertain.
The firm’s analysis suggests that First Solar’s focus on U.S. and Indian production for domestic markets could yield approximately $25 in earnings per share (EPS) when fully operational. Despite the current challenges, the long-term outlook for First Solar remains positive, with the adjusted price objective set at $185.
In other recent news, First Solar has reported its first-quarter 2025 earnings, revealing a significant shortfall in both earnings per share (EPS) and revenue compared to forecasts. The company’s EPS was $1.95, missing the anticipated $2.54, while revenue came in at $844.57 million against a forecast of $866.19 million. Following these results, KeyBanc Capital Markets downgraded First Solar’s stock to Underweight and set a new price target of $100, citing lower-than-expected sales and the impact of global tariffs on the company’s operations. Similarly, Goldman Sachs adjusted its price target for First Solar to $204 from $235, maintaining a Buy rating but acknowledging potential near-term pressure due to tariff uncertainties.
First Solar’s revised guidance for 2025 accounts for various tariff scenarios, which could affect its operations in countries like India, Malaysia, and Vietnam. The company has also updated its full-year EPS guidance to a range of $12.50 to $17.50. Despite the challenges, First Solar’s gross margin improved to 41% from 37% in the previous quarter, reflecting some operational efficiencies. Analysts from Goldman Sachs and KeyBanc have highlighted the uncertainty surrounding tariffs and trade policies, which could impact the company’s financial outlook and strategic positioning. Investors are closely monitoring these developments, particularly as they pertain to First Solar’s future performance and market response.
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