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On Wednesday, UBS analyst team revised the price target for First Solar shares, traded on (NASDAQ:FSLR), to $285 from the previous $360 while sustaining a Buy rating on the stock. Currently trading at $156.84, the stock has experienced a significant 32.7% decline over the past six months. The adjustment follows the company’s recent financial guidance which, according to UBS, should be viewed positively despite initial concerns over the 2025 revenue outlook. According to InvestingPro analysis, First Solar appears undervalued based on its Fair Value calculations.
First Solar’s mid-point revenue guidance for 2025 is set at $5.55 billion, slightly above the consensus of $5.52 billion. The company has demonstrated strong growth with revenue increasing 21.8% in the last twelve months, maintaining a healthy gross margin of 46.5%. UBS’s analysts interpret this as a reassuring sign, especially since there were apprehensions about a potentially weak revenue guide for 2025 prior to the announcement. In response to the new financial data and company commentary, UBS has updated its earnings per share (EPS) estimates for 2025, 2026, and 2027 to $18.89, $26.51, and $32.86, respectively. These figures have been adjusted down from earlier projections of $20.65, $30.79, and $35.05 due to increased costs related to logistics, warehousing, and anticipated costs for production ramping. InvestingPro subscribers can access 8 additional key insights about First Solar’s financial health and growth prospects.
The report from UBS also highlighted First Solar’s operational progress, noting that the U.S. production ramp-up appears to be on track or even ahead of schedule. This is significant as the company’s U.S. facilities are currently overbooked, which provides a buffer against potential delays and terminations. The company operates with a moderate debt level and maintains strong liquidity, with a current ratio of 2.14. Despite noting some concerns about weak international demand affecting non-U.S. capacity, UBS maintains that the primary value and upside for First Solar lie within its three U.S. factories, which boast a combined capacity of 14GW per year.
UBS emphasizes First Solar’s competitive edge, citing the company’s "technological moat" surrounding its fully domestic U.S.-manufactured solar modules. Trading at a P/E ratio of 13.6 and maintaining a strong return on equity of 18%, the company has demonstrated its ability to generate value from its technological advantages. This advantage is contrasted with the less significant role of the company’s non-U.S. production capacity.
In other recent news, First Solar’s financial performance and outlook have drawn significant attention from analysts. RBC Capital Markets reduced its price target for First Solar to $251, citing disappointing fourth-quarter results for 2024 and guidance for 2025. The company faced several challenges, including $118 million in transitory charges and unexpected operational expenses. Despite these setbacks, RBC Capital noted that First Solar’s gross profit and EBIT exceeded their estimates. Meanwhile, BofA Securities reiterated a Buy rating with a price target of $236, highlighting First Solar’s technological advancements and strategic positioning in the U.S. market. BMO Capital Markets also lowered its price target to $230, reflecting concerns over warranty expenses and financial guidance for 2025, though recent updates have eased some concerns. Piper Sandler adjusted its price target to $230 following an earnings report that revealed an EPS miss due to lower margins, yet expressed optimism for potential improvements in 2026. Truist Securities reduced its target to $285, maintaining a Buy rating, and emphasized First Solar’s effective market navigation and manufacturing expansion in the U.S. These developments underscore the varied perspectives among analysts regarding First Solar’s future prospects.
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