Freeport-McMoRan stock tumbles after Trump imposes copper tariffs
On Thursday, Piper Sandler issued a report detailing the potential consequences of the newly announced reciprocal tariffs on the Renewable & Alternative Energy sector. The tariffs, introduced by President Trump on countries crucial to the clean energy supply chain, are significant and could pose risks to companies within the sector, including First Solar (NASDAQ:FSLR), which may face challenges due to tariffs on Vietnamese and Malaysian imports.
According to the report, the tariffs on countries like Cambodia, Vietnam, Thailand, China, Taiwan, Indonesia, India, and Malaysia range from 24% to 49%. This has already led to a substantial drop in panel supply from key Southeast Asian regions, with a year-over-year decline of 74% in December and January. While domestic panel inventory and supply provide some buffer for 2025’s solar construction activities, mid-construction problems could arise, potentially requiring power purchase agreements (PPAs) to be renegotiated.
First Solar, in particular, is under scrutiny as 34% of its 2025 shipments to the U.S. are expected to come from Vietnam and Malaysia, which are now subject to around a 35% tariff. Additionally, about 12% of their shipments are Series-7 products from India, facing a 26% tariff. While First Solar’s contracts offer some tariff protection, the implications for margins and repeat business remain uncertain should costs need to be shared or borne by customers.
The report suggests that the tariffs will likely accelerate the shift towards domestic manufacturing, with pricing converging to the higher of the import costs plus tariffs or domestic pricing, capped by the extent to which PPAs can absorb the increased costs. The upcoming first-quarter earnings season is expected to provide further insights into the impact of these tariffs.
The broader implications for the sector include potential margin and demand risks to other companies such as Bloom Energy (NYSE:BE), Enphase Energy (NASDAQ:ENPH), SolarEdge Technologies (NASDAQ:SEDG), and Generac Holdings (NYSE:GNRC). Companies like Fluence Energy (NASDAQ:FLNC), NextEra Energy (NYSE:NEE) (NYSE:NXT), Shoals Technologies Group (NASDAQ:SHLS), and Array Technologies (NASDAQ:ARRY) face less direct risk barring project delays. According to InvestingPro data, Shoals Technologies maintains a healthy financial position with a current ratio of 2.33 and operates with moderate debt levels. Despite the stock’s significant decline of nearly 70% over the past year, management has been actively buying back shares, demonstrating confidence in the company’s fundamentals. The company appears undervalued based on InvestingPro’s Fair Value analysis.Want deeper insights? InvestingPro subscribers get access to 14 additional ProTips for SHLS, along with comprehensive financial analysis and Fair Value models. Plus, discover similar opportunities with our Most Undervalued Stocks list and detailed Pro Research Reports covering 1,400+ top US stocks.
In other recent news, Shoals Technologies Group reported fourth-quarter earnings with adjusted earnings per share of $0.08, slightly missing analyst estimates by $0.01. However, the company’s revenue of $107 million surpassed expectations of $101.98 million, despite a year-over-year decline from $130.4 million. The outlook for 2025 was less optimistic, with first-quarter revenue expected between $70-80 million, significantly below the $109.04 million consensus estimate, and full-year revenue projected at $410-450 million, compared to analyst expectations of $443.2 million. Jefferies analyst Julian Dumoulin-Smith adjusted Shoals Technologies’ price target to $3.40 from $4.60, maintaining a Hold rating, citing a mixed near-term outlook and potential project delays. Oppenheimer, on the other hand, reiterated an Outperform rating with a $10.00 price target, emphasizing the company’s backlog growth and existing orders covering 2025 guidance. Additionally, Shoals Technologies appointed Ernst & Young LLP as its new independent auditor, replacing BDO USA, P.C., with no disagreements reported between the company and its former auditor. These developments reflect ongoing challenges and strategic adjustments within Shoals Technologies Group as it navigates a competitive market landscape.
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