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On Wednesday, KeyBanc Capital Markets adjusted its stance on First Solar stock, downgrading it from Sector Weight to Underweight and setting a new price target of $100. The downgrade followed First Solar’s recent announcement of first-quarter results, which fell short of both KeyBanc’s estimates and the broader market consensus. The company reported lower-than-expected sales, gross margin, and earnings per share. According to InvestingPro data, the stock has declined nearly 30% over the past six months, though analysis suggests the company maintains a "GREAT" financial health score of 3.2 out of 5.
The revised outlook also takes into account First Solar’s reduced guidance for fiscal year 2025 and its downward revision of bookings. These changes were attributed to the impact of global tariffs that were introduced earlier in April. According to KeyBanc, the tariffs are affecting the volume of solar panels First Solar imports from its production facilities in Vietnam, Malaysia, and India more significantly than previously anticipated. Despite these challenges, InvestingPro data shows the company maintains strong fundamentals with a healthy current ratio of 2.45 and trades at a P/E ratio of 11.6, suggesting potential value opportunity.
KeyBanc highlighted that while First Solar has a substantial manufacturing presence in the United States, the newly imposed 10% global tariff regime, along with the possibility of higher reciprocal tariffs, is likely to affect the company’s valuation in the near term. The firm also noted the current uncertainty surrounding the Investment Tax Credit ( ITC (NSE:ITC)) provisions under the Inflation Reduction Act (IRA), which adds another layer of concern for investors.
The firm stated that it will reevaluate First Solar’s position once there is a clearer indication that the policy environment is becoming more favorable. Until then, the lowered price target reflects the pressures KeyBanc expects First Solar to face due to the recent policy and market developments.
In other recent news, First Solar Inc (NASDAQ:FSLR). reported its first-quarter 2025 earnings, revealing a significant miss in both earnings per share (EPS) and revenue compared to forecasts. The company’s EPS came in at $1.95, falling short of the anticipated $2.54, while revenue was reported at $844.57 million, below the expected $866.19 million. Despite these setbacks, First Solar’s gross margin improved to 41% from 37% in the previous quarter. The company has set its full-year 2025 EPS guidance between $12.50 and $17.50. Analyst firms have noted the challenges posed by the current policy environment, particularly concerning tariffs, which have introduced significant uncertainty. These tariffs could impact First Solar’s international module sales, with potential idling of manufacturing facilities in Malaysia and Vietnam. The company is currently engaging with customers to discuss the allocation of tariff risks, which could affect its contracted backlog and future growth plans.
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