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On Wednesday, Oppenheimer analysts downgraded First Solar shares from Outperform to Perform, citing concerns over potential tariff and tax policy changes. The downgrade reflects the uncertainty First Solar faces as it navigates through ongoing trade policy issues. Despite the challenges, InvestingPro data shows the company maintains strong fundamentals with a "GREAT" financial health score and holds more cash than debt on its balance sheet. Management at First Solar has expressed a readiness to idle production capacity if President Trump’s proposed reciprocal tariffs are enacted without their customers sharing the increased costs.
The company is currently unable to start negotiations with its customers due to the lack of clarity regarding possible adjustments to tariffs and the Investment Tax Credit ( ITC (NSE:ITC)). With a healthy gross profit margin of 44% and revenue growth of 19% over the last twelve months, First Solar’s executives are anticipating that policymakers will ultimately back the company’s position and expect customers to absorb any additional expenses. However, the uncertainty surrounding when policy resolutions will be achieved has led to the possibility that the lower end of the company’s 2025 financial guidance may be the most realistic outcome.
First Solar’s management pointed out that federal budget negotiations could continue into 2026, adding to the already prevalent uncertainty. This extended timeline for policy clarity has influenced Oppenheimer’s decision to downgrade the stock rating. The firm’s analysts believe that until there is further clarity on these policies, a more cautious outlook on First Solar is warranted.
The solar energy company, listed on (NASDAQ:FSLR), is facing a challenging period as it deals with the implications of the ongoing trade and tax policy discussions. The downgrade serves as an indicator of the potential impact such policy uncertainties can have on companies within the renewable energy sector.
Investors and stakeholders of First Solar may now be monitoring the situation closely, as the company’s strategic decisions in response to tariff and tax policy changes could significantly influence its operational and financial performance. The stock has experienced a significant 29% decline over the past six months, though InvestingPro analysis indicates the company is currently undervalued. The market will likely look for signs of resolution to these policy issues to better assess the future prospects of First Solar. For deeper insights into First Solar’s valuation and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively on InvestingPro.
In other recent news, First Solar has 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 was $1.95, falling short of the anticipated $2.54, while revenue came in at $844.57 million against a forecast of $866.19 million. Following the earnings announcement, several analyst firms adjusted their positions on First Solar. BofA Securities lowered its price target to $185 from $215, maintaining a Buy rating, citing the company’s decision to cut potentially uneconomic volume and halt production in Malaysia and Vietnam as a disciplined approach. Goldman Sachs also reduced its price target to $204 from $235, maintaining a Buy rating, and highlighted that the stock might face near-term pressure due to tariff uncertainties. Meanwhile, KeyBanc downgraded First Solar from Sector Weight to Underweight, setting a new price target of $100, pointing to the impact of global tariffs on the company’s international operations. These developments reflect the challenges First Solar faces due to tariff-related uncertainties and the broader market response to its revised guidance and strategic positioning.
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