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On Tuesday, Wolfe Research upgraded First Solar (NASDAQ:FSLR) stock from ’Peer Perform’ to ’Outperform’, setting a new price target at $221. The upgrade reflects the firm’s confidence in First Solar as a direct beneficiary of the Inflation Reduction Act (IRA) and prevailing anti-China sentiment. The stock, currently trading at $156.21, has shown strong momentum with a 23% gain in the past week, according to InvestingPro data. Wolfe Research sees the proposed legislative changes by the House Ways and Means Committee, which shorten the 45X tax credit duration by one year, as a positive move that alleviates investor concerns regarding the stability of IRA tax credits amid election uncertainties.
The research firm’s positive outlook is further bolstered by bipartisan support for the tax bill, which is seen as an indication that the 45X tax credit is likely to be shielded from potential repeal. Wolfe Research’s analysis suggests that the political climate and legislative actions are creating a favorable environment for First Solar’s business and investor prospects. InvestingPro analysis shows the company maintains a strong financial position with a ’Good’ overall health score and operates with moderate debt levels.
Despite the upgrade, Wolfe Research acknowledges several risks that could impact First Solar’s performance. These include potential warranty issues with the company’s Series 7 panels, the perceived limitations of thin-film technology compared to other solar technologies, and the emergence of new competitors in the U.S. market, which may lead to lower average selling prices (ASPs). The company currently trades at a P/E ratio of 12.7, with earnings per share of $11.81 over the last twelve months. Additionally, the firm notes the risks of customer project delays or cancellations and the unpredictability of logistics and freight, which could lead to unforeseen negative outcomes for the company.
First Solar’s stock upgrade by Wolfe Research is a significant indicator of the company’s potential to capitalize on the current political and economic landscape. The firm’s assessment points to the strategic benefits that First Solar could reap from the IRA and the broader sentiment favoring domestic production over imports from China. The new price target of $221 reflects Wolfe Research’s confidence in the company’s ability to navigate the risks and leverage the opportunities ahead. For deeper insights into First Solar’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro, which includes detailed analysis of the company’s financial health, market position, and growth potential.
In other recent news, First Solar has seen multiple adjustments to its stock ratings and price targets. Jefferies downgraded First Solar from "Buy" to "Hold," slashing the price target from $202.00 to $127.00, citing concerns over potential margin pressures and international trade tariffs. Truist Securities and TD Cowen both maintained a "Buy" rating but reduced their price targets to $200, reflecting challenges in the utility-scale solar industry and uncertainties surrounding tariffs and the Inflation Reduction Act. Mizuho (NYSE:MFG) Securities slightly lowered its price target to $251.00 while keeping an "Outperform" rating, noting higher underutilization costs at Southeast Asia production facilities due to tariff impacts.
Oppenheimer, however, downgraded First Solar from "Outperform" to "Perform," pointing to uncertainties in tariff and tax policies as key concerns. These developments highlight the complex environment First Solar is navigating, with analysts expressing cautious optimism about the company’s long-term position despite near-term challenges. The market is closely watching how First Solar manages these issues, particularly in relation to its production and policy-related negotiations.
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