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Tuesday, First Solar (NASDAQ:FSLR) shares continued to attract attention following a reaffirmed Overweight rating and $205.00 price target by Piper Sandler. The stock, currently trading at $156.21, has shown remarkable momentum with a 23% gain in the past week. According to InvestingPro data, analyst targets range from $100 to $304, with a consensus recommendation leaning strongly toward buy. The research firm’s analysts highlighted First Solar’s solid performance in the first quarter, despite challenges posed by tariffs. The positive outlook was bolstered by strong power demand and the potential for a new capital cycle in transmission.
The company’s updates indicated resilience in the face of tariff-related setbacks, with the analysts noting a strong demand for power driven by data centers and onshoring activities. This resilience is reflected in First Solar’s solid financials, with revenue growing 19.4% and maintaining a healthy gross profit margin of 43.6%. Moreover, the expectations for utility-scale levered construction in 2025 remain unchanged, except for storage, which is anticipated to see improvements due to reduced Chinese tariffs. InvestingPro’s analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report.
The residential sector presented a mixed but better-than-expected performance. This comes as the earnings season transitions into discussions about the initial draft of changes to the Inflation Reduction Act (IRA). According to Piper Sandler, if the Republicans’ goal with the IRA alterations is to cut costs, support non-Chinese manufacturers with intellectual property, and lessen dependence on China without negatively affecting medium-term construction, then the outcome is commendable. First Solar maintains a strong financial position with a current ratio of 1.93 and operates with moderate debt levels, positioning it well for potential industry changes.
The proposed restrictions in the bill would prevent renewable energy projects from using equipment supplied by Chinese-owned companies, specifically naming CATL, BYD (SZ:002594), and Gotion. While the 45X FEOC is considered highly restrictive, it is still in its first draft and could be subject to revisions after industry lobbying. Piper Sandler analysts believe that the current provisions in the bill could potentially unlock a bull-case scenario for First Solar, which currently trades at an attractive P/E ratio of 12.7 relative to its near-term earnings growth potential.
In other recent news, First Solar has been at the center of several analyst updates and financial revisions. The company has adjusted its 2025 guidance due to uncertainty over tariffs, with scenarios ranging from full reciprocal tariffs to a universal tariff of 10%, according to Goldman Sachs. Wolfe Research upgraded First Solar’s stock rating to "Outperform" with a new price target of $221, citing benefits from the Inflation Reduction Act and anti-China sentiment as positive factors. Jefferies, however, downgraded the stock from "Buy" to "Hold" and reduced the price target to $127, highlighting concerns over margin compression and challenging market conditions.
Truist Securities also revised its price target to $200, maintaining a "Buy" rating while acknowledging the complex environment First Solar faces, especially regarding tariffs and the Inflation Reduction Act. TD Cowen echoed this sentiment by lowering the price target to $200 but retained a "Buy" rating, noting stable average selling prices and improved warranty issues. Analysts from TD Cowen emphasized First Solar’s strategic advantage due to its U.S.-based supply chain, which is expected to expand significantly by 2026.
Despite the mixed outlook, First Solar remains a focal point for investors due to its unique position in the solar industry. The company’s ability to navigate tariff uncertainties and leverage political and trade developments will be crucial in shaping its financial performance and investor confidence moving forward.
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