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On Thursday, Mizuho (NYSE:MFG) Securities adjusted its outlook on First Solar stock (NASDAQ:FSLR), reducing the price target from $259.00 to $252.00. Despite this change, the firm continues to recommend the stock with an Outperform rating. The adjustment follows the company’s fourth-quarter results and its revenue guidance for fiscal year 2025, which met analysts’ expectations. The company has demonstrated strong financial performance, with revenue growth of 26.75% and an impressive gross margin of 44.17% in the last twelve months.
First Solar’s module warranty was reported at the lower end of Mizuho’s scenarios, and while the gross margin percentage guide for 2025 fell short of estimates, it is perceived as a one-time occurrence. The company is actively utilizing its TOPCon solar cell technology patent, evidenced by a new licensing agreement and a trade case initiated against competitor JinkoSolar (NYSE:JKS). According to InvestingPro analysis, First Solar currently appears undervalued, trading at a P/E ratio of 13.58, which is relatively low considering its growth prospects.
The update highlighted that First Solar’s U.S. production is progressing as planned. The Alabama facility is expected to be fully ramped up by the end of the first quarter of 2025, with the Louisiana site anticipated to increase production in the second half of the year. However, the company faces challenges internationally, particularly with the delay of 1 GW Series 6 modules. Despite these delays, First Solar is optimizing its resources across its production fleets. InvestingPro data reveals the company maintains strong financial health with a GOOD overall score, suggesting robust operational capabilities. Get access to 8 more exclusive ProTips and comprehensive analysis in the Pro Research Report.
Booking (NASDAQ:BKNG) volumes for First Solar were modest, which did not come as a surprise, and average selling prices (ASPs) remained relatively flat compared to the previous quarter. The slight reduction in the price target to $252 is attributed to a marginal decrease in gross margin percentage. Mizuho’s continued endorsement of an Outperform rating for First Solar rests on the expectation of stable pricing in the U.S. market, supported by tariffs and patent advantages, irrespective of potential changes to the Inflation Reduction Act incentives.
In other recent news, First Solar has experienced a series of adjustments from various analyst firms regarding its stock price targets. UBS has reduced its target to $285 while maintaining a Buy rating, highlighting the company’s mid-point revenue guidance for 2025 at $5.55 billion, slightly above consensus. UBS noted concerns about increased costs but emphasized First Solar’s U.S. production ramp-up as a positive development. RBC Capital also lowered its price target to $251, citing disappointing fourth-quarter results for 2024 and challenges impacting operational efficiency, though they maintained an Outperform rating.
BofA Securities reaffirmed a Buy rating with a $236 target, pointing out First Solar’s technological advancements and strong U.S. regulatory environment as competitive advantages. They expect the company to manage short-term challenges and increase production significantly by 2026. BMO Capital cut its target to $230, maintaining an Outperform rating, while expressing concerns about warranty expenses and gross margin guidance for 2025. Piper Sandler adjusted its target to $230, noting an EPS miss due to increased costs but remained optimistic about future improvements with potential policy certainty.
These developments reflect a cautious yet optimistic view of First Solar’s future, with analysts acknowledging both current challenges and the company’s strategic advantages.
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