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On Thursday, Jefferies analyst Julian Dumoulin-Smith updated the financial outlook for First Solar (NASDAQ:FSLR), increasing the price target to $157 from $127 while retaining a Hold rating on the stock. The adjustment follows a detailed review of the potential impacts of the House bill, which includes restrictions under the Foreign Energy Output Credit (FEOC). According to InvestingPro data, analyst targets for First Solar range from $100 to $304, with the stock currently trading at a P/E ratio of 13.11. InvestingPro analysis suggests the stock is currently undervalued based on its proprietary Fair Value model.
Dumoulin-Smith noted that the market opportunity for First Solar has been revitalized due to the strength of the FEOC and the repeal of section 48E for projects that start after the year-end of 2028 or begin construction 60 days post-bill enactment. The analyst also mentioned that, with the Anti-Dumping/Countervailing Duties (AD/CVD) endorsed by the International Trade Commission ( ITC (NSE:ITC)), there could be an increased demand for First Solar’s modules as developers might seek to safe harbor ahead of policy changes. The company’s strong position is reflected in its impressive 19.42% revenue growth and robust financial health score from InvestingPro, which rates the company’s overall financial condition as "GOOD."
Despite the potential for increased market share and orders for First Solar, the analyst conveyed some caution, pointing out the overall market uncertainty regarding how the FEOC might be implemented. This uncertainty could benefit First Solar, but the analyst also emphasized that the market has not yet fully anticipated a possible increase in average selling price (ASP) or a ’reset’ in the marketplace.
The report also highlighted concerns about execution, the friction associated with scaling up production, and the shift of manufacturing to the United States from Southeast Asia, which could lead to less impressive results for 2025 and 2026. However, improvements are expected post-2027. Dumoulin-Smith suggested that the origination market would not change rapidly and that investors should be prepared for significant volatility in the coming weeks.
The potential loss of the 45X tax credit by the end of 2027 was mentioned as a negative factor, reducing the price target by $47 per share. Nevertheless, the analyst clarified that the 45X credit is expected to continue through 2031 according to the House version of the bill, indicating that this is not a major concern at the moment. InvestingPro subscribers have access to over 30 additional financial metrics and insights for First Solar, including detailed analysis of the company’s tax implications and future earnings potential, available in the comprehensive Pro Research Report.
In other recent news, First Solar has been highlighted in several analyst reports due to recent legislative changes affecting the solar industry. Mizuho (NYSE:MFG) Securities identified First Solar as a primary beneficiary of new renewable incentives, despite challenges posed by anti-China policies that could impact industry demand. BMO Capital Markets adjusted their ratings on solar stocks, downgrading Sunrun (NASDAQ:RUN) to Underperform, but maintained an Outperform rating for First Solar, citing its advantageous position due to unchanged provisions in the legislative amendments. Meanwhile, Goldman Sachs raised First Solar’s price target to $255, maintaining a Buy rating, reflecting confidence in the company’s potential benefits from tariff and policy relief.
UBS also increased its price target for First Solar to $255, maintaining a Buy rating, driven by optimism about the continuation of domestic tax credits under the proposed budget. Piper Sandler reaffirmed an Overweight rating with a $205 price target, noting First Solar’s resilience amid tariff challenges and strong power demand. The proposed legislative changes, including restrictions on Chinese equipment, are being closely monitored as they could significantly impact the sector. The ongoing legislative process and its outcomes are critical for First Solar’s positioning in the market. Analysts have pointed out that these developments could unlock new opportunities for First Solar in the evolving renewable energy landscape.
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